Does managerial ownership influence corporate social responsibility (CSR)? The role of economic policy uncertainty

• Published in: Accounting and finance (Parkville) Vol. 61; no. 1; pp. 763 - 779
• Main Authors: Ongsakul, Viput, Jiraporn, Pornsit, Treepongkaruna, Sirimon
• Format: Journal Article
• Language: English
• Published: Clayton Wiley Subscription Services, Inc 01.03.2021; Blackwell Publishing Ltd
• Subjects: Agency theory; Analysis; Corporate social responsibility; Economic policy; Economic policy uncertainty; Managerial ownership; Organizational structure; Social responsibility
• ISSN: 0810-5391; 1467-629X
• DOI: 10.1111/acfi.12592

To explore the drivers of corporate social responsibility (CSR), we investigate how managerial ownership influences CSR in the presence of economic policy uncertainty. Our results demonstrate that, when facing more economic policy uncertainty (EPU), firms with larger managerial ownership invest significantly more in CSR. This is in agreement with the risk mitigation hypothesis, where CSR offers insurance‐like protection against adverse events. When economic policy uncertainty is not considered, however, we find that managers with higher ownership stakes invest significantly less in CSR, suggesting that CSR is driven by the agency conflict. As managers own more equity, they are subject to greater costs of CSR. Additional analyses confirm the results, including dynamic GMM, propensity score matching and instrumental‐variable analysis.