The Influence of Corporate Social Responsibility on Firm Buybacks

Abstract

This research is one of the first studies to examine the effects of CSR disclosures on a firm’s decision to purchase back their own shares of stocks. Additionally, the authors examine whether the effect of CSR disclosures is stronger than the effect of CSR performance on the decision to repurchase shares. Examining firms in the United States, the authors find that total CSR disclosures and the CSR disclosures related to the dimensions of social, environmental, and governance are significantly and positively related to the number of shares that a firm buys back. Additionally, the authors find that the effects of CSR disclosures are stronger for total and the CSR dimensions of social and governance than for CSR performance. For the environmental dimension of CSR, both disclosure and performance scores are significant. This research expands our understanding of the impact of CSR disclosure by showing the importance it plays in the decision to buy back stock and implies that firms that repurchase their stock are more socially responsive than firms that do not. Finally, it contributes to the growing literature on how CSR disclosure has a different impact than CSR performance on firm decisions and outcomes.

Citation

Mahoney, L.S., Brickner, D.R. and LaGore, W. (2021), "The Influence of Corporate Social Responsibility on Firm Buybacks", Baker, C.R. (Ed.) Research on Professional Responsibility and Ethics in Accounting (Research on Professional Responsibility and Ethics in Accounting, Vol. 24), Emerald Publishing Limited, Leeds, pp. 55-71. https://doi.org/10.1108/S1574-07652023003