Corporate Socially Responsible Investments
Few topics in business garner as much widespread interest as the debate over the social responsibility of corporations. Discussion of corporate social responsibility (CSR) permeates both the popular press and academia. Research articles related to the antecedents that affect the legality and definition of CSR populate academic journals across all of the business disciplines, economics, law, engineering, and the sciences. The breadth and depth of coverage suggests not only the importance placed on the corporate form of business, but also the unsettled status of the wisdom and impact of CSR on business and society.
This chapter explores how CSR affects and is affected by a firm's investment decisions. The discussion focuses primarily on a firm's real and financial asset investment decisions, frequently called socially responsible investing (SRI). The chapter begins with a discussion of CSR and the definition of a corporate socially responsible investment (CSRI). The chapter then briefly discusses some of the empirical challenges faced in exploring the link between CSRI and corporate financial performance (CFP). Next, five commonly hypothesized sources of CSRI's impact on the firm are discussed, and an overview of the empirical evidence associated with each source is presented. The final section provides a summary and conclusions.