تاثیر مسئولیت اجتماعی شرکت ها بر چرخه عمر شرکت Does corporate social responsibility extend firm life-cycles?

1. Introduction Corporate social responsibility (CSR) has emerged as a critical issue over the past two decades, not only due to increased consumer awareness, regulation, and corporate governance but also as a factor associated with long-term firm performance (Lin et al., 2009; Roberts and Dowling, 2002). This increased attention to CSR has raised several questions: what benefits do firms gain from enhanced CSR practice, and how does CSR relate to managerial performance? Empirical studies have sought to satisfy these questions through investigating various aspects of CSR, including capital allocation efficiency (Bhandari and Javakhadze, 2017), firm cash holdings (Cheung, 2016), cost of equity capital (Gregory et al., 2014; Girerd-Potin et al., 2014; Reverte, 2012), cost of corporate bonds (Ge and Liu, 2015), cost of bank loans (Goss and Roberts, 2011), financial transparency (Dhaliwal et al., 2014), variable competitiveness and increased stakeholder trust (Antonia García-Benau et al., 2013), dividend policy (Kim and Jeon, 2015), financial risk (Hsu and Chen, 2015), and financial performance (Nelling and Webb, 2009; Surroca et al., 2010). According to Owen and Yawson (2010), they exhibit a highly significant and positive relation between firm life cycle and the likelihood of becoming a bidder. However, they also show that life cycle has a negative impact on abnormal returns generated on the announcement of a deal, although they were unable to distinguish between the returns received by firms at different stages in their life cycle. This raises the need to understand CSR firms’ financial decision-making behavior at different life-cycles. However, CSR performance has implications for a firm’s capital allocation throughout its life-cycle, including policies for financing, capital structure, investment, and cash and dividends (i.e. cash holding, payout ratio, retained earnings, and free cash flow (FCF)). Ethical and integrative theories of CSR (Kim et al., 2012) suggest that socially responsible executives/firms tend to stick to a higher standard of corporate behavior consistent with their CSR goals. Thus, firms intent on accounting for global community benefits, human rights, environmental protection, and product safety, must do so in a way that still provides shareholders profits and ensures long-term sustainable operations. Given excess/positive FCF, firms tend to overinvest in negative NPV projects (Richardson, 2006; Jensen, 1986) rather than distribute the cash to shareholders which would leave the firm vulnerable to future acquisition attempts (Zhang, 2016). However, certain governance structures, such as firms with supermajority voting provisions and outstanding shares owned by block holders, appear to mitigate overinvestment activities (Zhang, 2016) to better maintain total assets. Therefore, cash holding, payout ratio, retained earnings, and FCF will be more sensitive to capital allocation in equity or debt issuance for CSR firms throughout their life-cycle. Empirical results in the financial theory suggest that a firm will benefit by reducing financing costs (Gregory et al., 2014; Ge and Liu, 2015; Goss and Roberts, 2011) and cash holdings (Cheung, 2016) under higher-CSR practice. This study explores whether and how CSR performance affects firm-level capital resource allocation and firm performance under different life-cycles.