Corporate social responsibility misconduct and formation of board interlocks

Wang，Yujie1; Tsang，Albert2; Xiang，Yi3; Yao，Daifei (Troy)4

2023-08-01

10.1016/j.jfs.2023.101162

Journal of Financial Stability   Impact Factor & Quartile

1572-3089

Corporate social responsibility (CSR) misconduct often negatively impacts firms and damages their reputation. Using data on U.S. listed firms from 2002 to 2018, we demonstrate that firms are more likely to establish board interlocks with firms that have better CSR performance after a CSR-related violation than with other firms. Furthermore, this relationship is more pronounced in violating firms that have a greater incentive to maintain their reputation than in other firms. We also find that the capital market and the media react positively to board interlock announcements by violating firms. However, we find no improvement in future CSR performance or a reduced likelihood of future CSR misconduct after the formation of such board interlocks. Altogether, our findings suggest that establishing board interlocks with firms that have better CSR performance is an effective signaling strategy for reputation management for firms engaging in CSR misconduct.

Board Interlocks Corporate Social Responsibility Reputation Violations

SSCI

English

Others

WOS:001062031500001

2-s2.0-85165561019

Scopus

1.School of Business,Central South University,China
2.Business School,Southern University of Science and Technology,China
3.School of Accounting and Finance,The Hong Kong Polytechnic University,Hong Kong
4.Griffith Business School,Griffith University,Australia

Wang，Yujie,Tsang，Albert,Xiang，Yi,et al. Corporate social responsibility misconduct and formation of board interlocks[J]. Journal of Financial Stability,2023,67.

Wang，Yujie,Tsang，Albert,Xiang，Yi,&Yao，Daifei .(2023).Corporate social responsibility misconduct and formation of board interlocks.Journal of Financial Stability,67.

Wang，Yujie,et al."Corporate social responsibility misconduct and formation of board interlocks".Journal of Financial Stability 67(2023).