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Do socially responsible firms walk the talk?

Raghunandan, Aneesh ORCID: 0000-0003-0443-4984 and Rajgopal, Shiva (2023) Do socially responsible firms walk the talk? Journal of Law and Economics. ISSN 0022-2186 (In Press)

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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 stakeholdercentric 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.

Item Type: Article
Official URL:
Additional Information: © 2024 University of Chicago Press
Divisions: Accounting
Subjects: H Social Sciences
H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HD Industries. Land use. Labor
JEL classification: M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M14 - Corporate Culture; Social Responsibility
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Pension Funds; Other Private Financial Institutions
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited: 04 Jan 2024 14:27
Last Modified: 08 Apr 2024 09:36

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