ESSEC Business School, France

The Unintended Consequences of Stakeholder Scrutiny on Corporate Social Responsibility

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Abstract

How does stakeholder scrutiny influence firms’ actions on environmental and social issues? Prior studies take an issue-centric approach whereby they focus on changes in firms’ actions on the specific social issue on which firms were scrutinized. In this paper, I move beyond this issue-centric approach and highlight that scrutiny on a specific social issue may lead to improvement in firms’ behaviour on unrelated social issues. Firms may improve their performance on unrelated social issues to rebuild reputation and deflect the attention of activists and broader stakeholders away from the issue on which firms were initially scrutinized. To find support for the above arguments, I exploit exogenous shocks that increased stakeholder scrutiny of firms in relation to the use of offshore tax havens. Using the difference-in-differences methodology, I analyze panel data on 1138 firms from 2012-2020 and find that firms exposed to these shocks increased their performance on unrelated social issues.

Biography

Shubham Singh is a fourth year PhD candidate in strategy and management at ESSEC Business School. His primary research interests include non-market strategy, stakeholder strategy and corporate social responsibility (CSR). In his dissertation, he examines how external factors such as regulatory changes and stakeholder scrutiny influences corporate social responsibility. In his research projects, he employs quantitative methods to analyse large scale archival data on firms.