Article
It’s who you know that counts: Board connectedness and CSR performance
Journal of Corporate Finance
(2020)
Abstract
We examine whether and how board connections affect the firm's corporate social responsibilities
(CSR). Grounded in the agency, resource dependence, and social network theory, our research
predicts and finds that board connectedness is positively associated with CSR performance. This
result is robust to a quasi-natural experiment, alternative measurement specifications, and an
instrumental variable approach. Our findings suggest firms that operate in a complex business
environment or require more advising (i.e. where demand for information is greater) benefit
more from a well-networked board. Also, firms that are poorly governed, have high stock return
volatility, low market capitalization, or low institutional ownership tend to benefit more from the
well-connected board when the cost of acquiring information is higher. In addition, we show that
independent directors’ abilities to gather information and resources from their networks can
facilitate the transmission of information. Collectively, our study documents the informational
advantage of a network as the predominant channel that allows a well-connected board to improve
a firm’s CSR performance.
Keywords
- CSR,
- Corporate Social Responsibiliy,
- Board of Directors,
- Board Network
Disciplines
Publication Date
Fall October, 2020
Citation Information
Abu Amin, Lamia Chourou, Mahfuja Malik, SYED KAMAL, et al.. "It’s who you know that counts: Board connectedness and CSR performance" Journal of Corporate Finance (2020) Available at: http://works.bepress.com/mahfuja_malik/25/