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Corporate Social Responsibility and Capital Allocation Efficiency: Evidence from Australia and New Zealand

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Dissertation(501.31 KB)

Date

2018

Authors

Supervisor

Tourani-Rad, Alireza
Garel, Alexandre

Item type

Dissertation

Degree name

Master of Business

Journal Title

Journal ISSN

Volume Title

Publisher

Auckland University of Technology

Abstract

This paper studies the effect of Corporate Social Responsibility on firm’s capital allocation efficiency in Australia and New Zealand. More specifically, I examine whether CSR influences a firm’s investment efficiency. I use ESG ratings to measure CSR. The empirical results show that the overall ESG performance, the environmental dimension performance, and the social dimension performance are not significantly associated with a firm’s investment efficiency. Only CSR policies or initiatives which are essentially costly to a firm are negatively associated with a firm’s investment efficiency. These findings are robust to a battery of robustness checks. The results suggest that when CSR initiatives reduce a firm's capital and other critical resources, those resources are not deployed for identifying and funding growth options, resulting in investment less likely to maximize shareholders’ wealth.

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Keywords

corporate investment, corporate social responsibility, ESG rating, investment efficiency

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Permanent link

https://hdl.handle.net/10292/11911

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Masters Dissertations