Ethical image, corporate social responsibility, and R&D valuation

Simon S.M. Ho, Annie Yuansha Li, Kinsun Tam and Jamie Y. Tong

Pacific-Basin Finance Journal, 2016, vol. 40, issue PB, 335-348

Abstract: This study examines whether socially responsible firms carry higher research and development (R&D) valuation, and how product market competition affects this relationship. From a sample of U.S. firms over the period 1995–2010, we find firms with stronger corporate social responsibility (CSR) performance to have higher R&D valuation. This result supports the view that CSR efforts create an ethical and healthy corporate image which lends credence to its R&D projects. As expeted, the above positive relationship between CSR efforts and R&D valuation is significant only in highly competitive industries. This study contributes to the literature by demonstrating that ethical image affects the market's perception on R&D investments and the valuation of the firm.

Keywords: Ethical image; Corporate social responsibility; R&D valuation; Product market competition (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:40:y:2016:i:pb:p:335-348

DOI: 10.1016/j.pacfin.2016.02.002

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