Corporate Social Responsibility and the Value of Corporate Cash Holdings: Evidence from the European Market

Abstract

In this paper, I investigate how the marginal value of corporate cash holdings changes conditional on the level of corporate social responsibility in a company. I find robust evidence that among European firms, high CSR proficiency is connected to a lower cash valuation by investors. Additionally, my results provide evidence on the dominant importance of CSR in risk prevention, by showing that some level of protective CSR is valued by most investors. Positive corporate social performance is valued only by a small minority of investors.