Corporate social responsibility (CSR) initiatives are increasingly becoming a vital part of business strategy. The study explores the impact of CSR on companies’ financial performance, finding a positive correlation between the two. Firms that incorporate CSR into their business model tend to have improved access to finance, reduced capital constraints, and enhanced firm value.
Shareholder proposals on CSR are also found to be a significant driving force behind this positive impact. When such proposals are adopted, firms experience a substantial increase in shareholder value. This increase is more pronounced in firms that are more constrained financially, those with a weaker governance structure, and those operating in more competitive industries.
Moreover, CSR initiatives also have a positive effect on labour relations, with firms experiencing a decrease in employee turnover and an increase in employee satisfaction. The study also finds that CSR positively impacts customers, leading to higher customer satisfaction and loyalty.
Lastly, the study reveals that CSR initiatives can mitigate the negative impact of adverse events on firm value. Firms with robust CSR practices are less likely to experience significant drops in stock prices following adverse events.
Overall, the study provides a comprehensive understanding of the various ways in which CSR can enhance firm value, highlighting the importance of integrating CSR into business strategy.
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