School of Citizenship and Public Affairs 1-3-2011 Financial Constraints on Corporate Goodness

@inproceedings{Hong2012SchoolOC,
  title={School of Citizenship and Public Affairs 1-3-2011 Financial Constraints on Corporate Goodness},
  author={Harrison Hong and Jeffrey D. Kubik and Jos{\'e} A. Scheinkman},
  year={2012}
}
We model the firm’s optimal choice of capital and goodness subject to financial constraints. Managers and shareholders derive benefits over profits and social responsibility. Goodness is costly and its marginal benefit is finite; as a result, less-constrained firms spend more on goodness. We verify that less-constrained firms do indeed have higher social responsibility scores. Our empirical analysis addresses identification issues that have long plagued the corporate social responsibility… CONTINUE READING

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