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Corporate social responsibility and insider horizon

Research output: Contribution to Journal/MagazineJournal articlepeer-review

E-pub ahead of print
Article number102696
<mark>Journal publication date</mark>28/02/2025
<mark>Journal</mark>Journal of Corporate Finance
Volume90
Publication StatusE-pub ahead of print
Early online date19/11/24
<mark>Original language</mark>English

Abstract

We show a positive relation between insider horizon and a firm's corporate social responsibility (CSR) performance. This positive relation is likely driven by good internal governance rather than agency problems. To support a causal interpretation, we adopt managerial career horizon reductions and the rejection of inevitable disclosure doctrine as exogenous shocks to insider horizon. We find that the observed positive effects are stronger when firms have higher ownership of long-term and socially responsible institutional investors, when insiders sign long-term compensation contracts, and when firms face less takeover pressure. We document the real effects of long-horizon insiders using various raw CSR metrics. Overall, our results indicate that insiders' long-term orientation can promote CSR.