Do Managers Do Good With Other People ’ s Money ?

  title={Do Managers Do Good With Other People ’ s Money ?},
  author={I. Cheng and Harrison Hong and Kelly Shue},
We test the hypothesis that corporate social responsibility is due to managerial agency problems using two identification strategies. First, we use the 2003 Dividend Tax Cut, which increased the after-tax effective firm ownership for managers. Consistent with the agency view, we find that the tax cut led to a decline in corporate goodness. We then use a difference-in-differences approach to test a prediction of the agency model that firms with intermediate managerial ownership stakes should… CONTINUE READING
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