BTECH research seminar

The speaker for this seminar is: 

Ane Cecilie Højstrup Jensen – BTECH

Title: Does Corporate Social Irresponsibility Hurt Shareholder Value?  An African Cross-Country Study

In existing literature, the prevalence of weak institutional environments and its prioritisation of economic responsibilities create increased risk of socially irresponsible behaviour (e.g. Adegbite, Nakpodia, Kan, & Onakoya, 2018; Amaeshi, Adegbite, & Rajwani, 2016b).

Despite documented corporate social irresponsibility (CSI) (e.g. tax evasion, human rights abuse and bribery), there appears to be a lack of research quantitatively assessing the impact of CSI on shareholder value across the African continent. From the lens of stakeholder theory, expectancy violations and institutional voids, we argue that the interrelationship between stakeholder expectations, power and interests is of primacy to the firm and can exert influence on firms’ economic role in creating shareholder value in the macro environment.  

Using a large, unique sample of 865 African companies across the only emerging markets in Africa (Egypt and South Africa) and representative frontier markets (Kenya and Nigeria) during the years 2009-2016, we find that firms avoiding CSI behaviour earn higher average returns and that the penalty for CSI is higher in countries with stronger institutional environments. The findings imply that even in the context of weak institutions, adherence to basic moral principles (i.e. avoiding bad) appear to be good business practice.