Do Socially Responsible Firms Walk the Talk?
Year: 2024
Type: article
Abstract: Several firms claim to be socially responsible. We confront these claims with data using the most notable recent proclamation, the Business Roundtable’s (BRT) 2019 Statement on the Purpose of a Corporation. The BRT is a large, influential business group containing many of America’s largest firms; the Statement proclaimed a corporation’s purpose as delivering value to all stakeholders, rather than only shareholders. However, we find no evidence that signatories – who voluntarily signed – engaged in such stakeholder-centric practices before or after signing. Relative to peers, signatories violate environmental and labor laws more frequently, have higher carbon emissions, rely more on government subsidies, and are more likely to disagree with proxy recommendations on shareholder proposals. We also do not observe post-signing improvements along these dimensions, suggesting that the Statement was not a credible commitment to improve. Our results suggest that firms’ proclamations of stakeholder-centric behavior are not backed up by hard data.
Source: The Journal of Law and Economics
DOI: 10.1086/728855
Authors: Aneesh Raghunandan, Shiva Rajgopal
Institutions: Yale University, Columbia University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4405203137