Corporate Social Responsibility and Firm Characteristics in Sweden: Who and What Makes a Firm a Better Corporate Citizen?:

Sammanfattning: Corporate Social Responsibility (CSR) has become an increasingly important issue in a firm’s agenda. This trend can be partially explained by factors external to the firm, such as media coverage and an interest of the public opinion in the impact of the firm on society and environment. Likewise, internal factors do also play a role on the social performance of a firm. The specific attributes of the firms may help to understand why some companies are more engaged in improving their social performance than others. In this thesis we are interested in identifying these characteristics of the firm, including ownership structure, which may be associated with a superior social performance. We hypothesize that the allocation of resources in CSR is the cause of a conflict between diverse agents influencing corporate activities. Individuals affiliated to the firm (such as managers and board of directors) may want to over-invest in CSR to obtain personal benefits such as reputation, even though it could be detrimental to other shareholders. Similarly, stakeholders who have an expected CSR-attitude may want to promote social issues into the corporate agenda, while leverage may act as a disciplinary mechanism preventing from over-investing in CSR. Using a unique rating on social issues for 84 publicly listed Swedish companies, we analyze the link between ownership structure and other characteristics of a firm, on one hand, and its corporate social performance, on the other. Our results partially suggest that certain pro-CSR investors (such as governments and non-profit organizations) may be succeeding in making companies in which they invest, more socially responsible. Moreover, we found that insider ownership is negatively and weakly related to social performance. This would occur because, with larger insider ownership, their private benefits of over-investing in CSR are offset by the larger costs that they carry. Furthermore, we found evidence that firm characteristics such as leverage, size, growth opportunities, risk and industrial sector are significantly related to corporate social performance.