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Corporate social responsibility and firms’ cost of equity: how does culture matter?

Marie-Louise Matthiesen (Chair of Finance, RWTH Aachen University, Aachen, Germany)
Astrid Juliane Salzmann (Chair of Finance, RWTH Aachen University, Aachen, Germany)

Cross Cultural & Strategic Management

ISSN: 2059-5794

Article publication date: 6 February 2017

2385

Abstract

Purpose

The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and cost of equity in an international context assessing the moderating effect of culture on the relation between CSR and the cost of equity.

Design/methodology/approach

The authors use an international sample of 42 countries, and company-level data from 2002 to 2013, to address cross-country variations in the effects of CSR on cost of equity in different cultural contexts.

Findings

The authors first substantiate previous research and show that the more a company is engaged in CSR, the lower its cost of equity. The authors then find that the relationship between CSR and cost of equity is stronger in countries with lower levels of assertiveness and higher levels of humane orientation and institutional collectivism.

Practical implications

The study advances understanding of how national culture promotes socially and environmentally responsible behavior. The implementation of CSR strategies depends on cultural norms, so companies need to be sensitive to local demands and adjust their CSR approaches accordingly.

Originality/value

The paper highlights the need to study how culture influences the relationship between CSR and cost of equity.

Keywords

Acknowledgements

The authors would like to thank the editorial team for their insights and guidance in developing the paper. The authors also appreciate feedback received from three anonymous referees through the revision process. Special thanks to Wolfgang Breuer for helpful suggestions. Marius Verdcheval provided excellent research assistance.

Citation

Matthiesen, M.-L. and Salzmann, A.J. (2017), "Corporate social responsibility and firms’ cost of equity: how does culture matter?", Cross Cultural & Strategic Management, Vol. 24 No. 1, pp. 105-124. https://doi.org/10.1108/CCSM-11-2015-0169

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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