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Journal of Business Ethics

Erschienen in:

13.12.2014

Do Leveraged Firms Underinvest in Corporate Social Responsibility? Evidence from Health and Safety Programs in U.S. Firms

verfasst von: Christophe Moussu, Steve Ohana

Erschienen in: Journal of Business Ethics | Ausgabe 4/2016

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Abstract

The explosion of health-related costs in U.S. firms over more than a decade is a huge concern for managers. The initiation of Health and Safety (H&S) programs at the firm level is an adequate Corporate Social Responsibility (CSR) initiative to contain this evolution. However, in spite of their documented efficiency, firms underinvest in those programs. This appears as a puzzle for health economists. In this paper, we uncover a strong negative relation of financial leverage to the implementation of H&S programs. The negative impact of debt on investment and CSR activities is generally interpreted as an efficient disciplinary effect of debt on managers. H&S are particularly well suited to revisit this evidence, given their strong profitability and homogeneity across firms. Very interestingly, the negative effect is stronger for firms with high free cash flows, for which debt is used to prevent overinvestment. This strongly suggests that debt, while disciplining managers, also discourages investments which are valuable both for firms and society.

Vorheriger Artikel Sustaining Inter-organizational Relationships Across Institutional Logics and Power Asymmetries: The Case of Fair Trade

Nächster Artikel Changing Social and Environmental Reporting Systems

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For example, Aldana (2001) provided a review of return on investment studies of corporate H&S initiatives; as regards the impact on health costs, the review reports an average return of $3.48 for every dollar expended across seven studies; regarding absenteeism reduction, the ROI estimates for four studies range from $2.50 to $10.10.

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Titel: Do Leveraged Firms Underinvest in Corporate Social Responsibility? Evidence from Health and Safety Programs in U.S. Firms
verfasst von: Christophe Moussu
Steve Ohana
Publikationsdatum: 13.12.2014
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 4/2016
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-014-2493-0

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