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The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness

Management Science · 2013 · Vol. 59(5) · pp. 1045–1061

Henri Servaes✉(Centre for Economic Policy Research)Ane Tamayo(London School of Economics and Political Science)

Abstract

This paper shows that corporate social responsibility (CSR) and firm value are positively related for firms with high customer awareness, as proxied by advertising expenditures. For firms with low customer awareness, the relation is either negative or insignificant. In addition, we find that the effect of awareness on the CSR–value relation is reversed for firms with a poor prior reputation as corporate citizens. This evidence is consistent with the view that CSR activities can add value to the firm but only under certain conditions. This paper was accepted by Bruno Cassiman, business strategy.

Corporate Social Responsibility Reporting Environmental Sustainability in Business Auditing, Earnings Management, GovernanceCorporate social responsibilityBusinessValue (mathematics)ReputationEnterprise valueRelation (database)Customer valueMarketingSocial responsibilityCustomer engagement

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