Varal, Shiwani
(2024)
Corporate responsibility and accountability in mandatory and voluntary settings.
PhD thesis, University of Nottingham.
Abstract
This dissertation, comprising three independent essays, contributes to the field of corporate finance with a focus on corporate accountability, corporate governance and corporate performance.
The first essay examines the relationship between mandatory corporate social responsibility (CSR) spending law and stock price crash risk. CSR has emerged as a critical factor influencing corporate performance and shaping business strategies. While most studies have focused on voluntary CSR engagement, an increasing number of countries are mandating CSR activities, raising questions about the effectiveness of mandatory CSR regulations. We predict and document that the mitigating effect of CSR on future crash risk may not hold in the case of a CSR mandate due to the absence of intrinsic motivation and signalling. Using agency theory (which considers differing preferences among owners) and shareholder-maximisation view (different stakeholders may have other preferences about CSR) and motivation crowding out theory, we explore how mandatory CSR may affect stock price crash risk. Our empirical analysis is based on a sample of 3,361 non-financial firms operating in India, with 17,534 firm-year observations from 2012 to 2017. The regulatory change during our sample period provides a quasi-natural experiment, allowing us to document that the mandated CSR rule increases a firm's future stock price crash risk in the post-mandate period.
The second essay performs an empirical analysis on the impact of mandatory CSR regulation on stock price informativeness (SPI), measured by low synchronicity. We utilise agency and signalling theory to understand the effect of mandatory CSR on SPI. We predict and document that mandatory CSR may not have the same SPI-enhancing effect as voluntary CSR due to lower signalling resulting from its compulsory nature. Our empirical analysis is based on 3,748 non-financial firms operating in India, resulting in 16,886 firm-year observations from 2012 to 2017. Using instrumental variables analysis and difference-in-differences approaches, we show that the impact of mandatory CSR on SPI is amplified for firms with weaker external oversight. We also demonstrate that advertising expenditures, stronger external scrutiny (e.g., from foreign investors and analyst coverage), and better internal corporate governance can help mitigate this effect.
The third essay conducts an empirical investigation on the determinants of voluntary disclosure of corporate political spending information, by investigating the educational background of CEOs in US listed firms. The 2010 Supreme Court decision in Citizens United v. Federal Election Commission (CU) allowed corporations to make unlimited contributions to independent political expenditure committees, raising concerns about transparency and accountability. Using logistic regression, we analyse the influence of a CEO's educational background (MBA, LAW, or STEM) on corporate political spending transparency among S&P 500 financial firms. Our analysis also uses panel regression for further robustness. We use the CPA Zicklin Index, created jointly by the Centre for Political Accountability and the Carol and Lawrence Zicklin Center for Business Ethics Research, to measure the S&P 500 firms' political spending information transparency and accountability. We find that CEOs with graduate degrees, particularly MBAs, are more likely to disclose information about political spending. Further, firms with lower institutional ownership and independent boards are more inclined to disclose political spending. Additionally, firms operating in Republican states are less likely to disclose information about political spending.
| Item Type: |
Thesis (University of Nottingham only)
(PhD)
|
| Supervisors: |
Mateut, Simona
Chevapatrakul, Thanaset |
| Keywords: |
Corporate Social Responsibility, Emerging market, Mandatory regulation, CEO education, Corporate Political Contribution Disclosure, CSR |
| Subjects: |
H Social sciences > HD Industries. Land use. Labor |
| Faculties/Schools: |
UK Campuses > Faculty of Social Sciences, Law and Education > Nottingham University Business School |
| Item ID: |
79478 |
| Depositing User: |
Varal, Shiwani
|
| Date Deposited: |
12 Dec 2024 04:40 |
| Last Modified: |
12 Dec 2024 04:40 |
| URI: |
https://eprints.nottingham.ac.uk/id/eprint/79478 |
Actions (Archive Staff Only)
 |
Edit View |
Tools
Tools
