How markets value CSR programs

Corporate social responsibility (CSR) is being adopted by an increasing amount of companies. However, such programs remain topic of debate. Do companies implement a CSR program to generate shareholder value, or is it implemented through stakeholder demand to solve a societal problem? This research sheds light on how markets value CSR programs and more importantly what motivations can be deducted from implementation of CSR programs. In this research seven different domains of CSR (Community, Corporate governance, Diversity, Employee Relations, Environment, Human rights and Product) are modeled from a perspective of strengths and concerns. This paper proves that markets value CSR programs positively. However, different relations are found for different firm characteristics (in size, EBITDA or revenue). In addition, there is no single CSR domain with the largest impact on firm value when differentiating between firms with different characteristics. On an aggregate level both US and non-US firms show that the CSR domain employee relations has the biggest impact on firm value. Differentiating between country/world-wide and industry/firm specific CSR variables showed that markets value country/world-wide CSR programs. Whereas industry/firm specific CSR programs are mostly not valued by markets. This indicates that firms are not only implementing CSR programs to create shareholder value but are also implementing CSR programs based on the desires of other stakeholders.