Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-16T17:04:02.916Z Has data issue: false hasContentIssue false
  • English
  • Français

Measuring and Improving Stakeholder Welfare Is Easier Said than Done

Published online by Cambridge University Press:  19 December 2022

Umit G. Gurun ,
Jordan Nickerson  and
David H. Solomon
Umit G. Gurun
Affiliation:
University of Texas at Dallas Department of Finance [email protected]
Jordan Nickerson
Affiliation:
University of Washington Department of Finance [email protected]
David H. Solomon*
Affiliation:
Boston College Department of Finance
*
[email protected] (corresponding author)
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

While corporate social responsibility by firms aims at improving welfare for different social groups, whether it achieves this is often difficult to measure. After Apr. 2018 protests, Starbucks enacted policies that anybody could sit in their stores and use the bathroom without making a purchase. Using anonymized cellphone location data, we estimate this led to a 7.0% decline in attendance relative to other nearby coffee shops. The effect is 84% larger near homeless shelters and larger for Starbucks’ wealthier customers. The average time spent per visit declined by 4.1%. Public urination citations decreased near Starbucks locations, but other minor crimes were unchanged.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 58 , Issue 4 , June 2023 , pp. 1473 - 1507
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

An earlier draft of this article was titled “The Perils of Private Provision of Public Goods.” We are grateful to Auren Hoffman, Lauren Spiegel, and Noah Yonack for their help with providing and understanding the SafeGraph’s anonymized GPS data. We also thank Sam Hartzmark, Eugene Soltes, and seminar participants at Chapman University, the University of St. Gallen, the 2021 Western Finance Association Meetings, and the 2021 European Finance Association Meetings for helpful comments. Some of the results in this article are based on researchers’ own analyses calculated (or derived) based in part on data from The Nielsen Company (US), LLC and marketing databases provided through the Nielsen data sets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from the Nielsen data are those of the researchers and do not reflect the views of Nielsen. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein. All remaining errors are our own.

References

Abadie, A.; Diamond, A.; and Hainmueller, J.. “Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program.” Journal of the American Statistical Association, 105 (2012), 493–505.CrossRefGoogle Scholar
Abadie, A., and Gardeazabal, J.. “The Economic Costs of Conflict: A Case Study of the Basque Country, American Economic Review, 93 (2003), 113–132.CrossRefGoogle Scholar
Athey, S.; Ferguson, B.; Gentzkow, M.; and Schmidt, T.. “Experienced Segregation.” Working Paper, Stanford University (2019).CrossRefGoogle Scholar
Becker-Olsen, K. L.; Cudmore, B. A.; and Hill, R. P.. “The Impact of Perceived Corporate Social Responsibility on Consumer Behavior.” Journal of Business Research, 59 (2006), 46–53.CrossRefGoogle Scholar
Bénabou, R., and Tirole, J.. “Individual and Corporate Social Responsibility.” Economica, 77 (2010), 1–19.CrossRefGoogle Scholar
Bhattacharya, C. B.; Sen, S.; and Korschun, D.. “Using Corporate Social Responsibility to Win the War for Talent.” MIT Sloan Management Review, 49 (2008), 37–44.Google Scholar
Bode, C.; Singh, J.; and Rogan, M.. “Corporate Social Initiatives and Employee Retention.” Organization Science, 26 (2015), 1702–1720.CrossRefGoogle Scholar
Brekke, K. A., and Nyborg, K.. “Attracting Responsible Employees: Green Production as Labor Market Screening.” Resource and Energy Economics, 30 (2008), 509–526.CrossRefGoogle Scholar
Chen, M. K., and Rohla, R., “The Effect of Partisanship and Political Advertising on Close Family Ties.” Science, 360 (2018), 1020–1024.CrossRefGoogle ScholarPubMed
Cheng, H.; Hong, H.; and Shue, K.. “Do Managers Do Good with Other People’s Money?” NBER Research Paper No. w19432 (2013).CrossRefGoogle Scholar
Cheng, B.; Ioannou, I.; and Serafeim, G.. “Corporate Social Responsibility and Access to Finance.” Strategic Management Journal, 35 (2014), 1–23.CrossRefGoogle Scholar
Dai, R.; Liang, H.; and Ng, L.. “Socially Responsible Corporate Customers.” Journal of Financial Economics, 142 (2021), 598–626.CrossRefGoogle Scholar
Dhaliwal, D.; Li, O. Z.; Tsang, A. H.; and Yang, Y. G.. “Voluntary Non-Financial Disclosure and the Cost of Equity Capital: The Case of Corporate Social Responsibility Reporting.” Accounting Review, 86 (2011), 59–100.CrossRefGoogle Scholar
Eccles, R. G.; Ioannou, I.; and Serafeim, G.. “The Impact of Corporate Sustainability on Organizational Processes and Performance.” Management Science, 60 (2014), 2835–2857.CrossRefGoogle Scholar
Edmans, A. “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices.” Journal of Financial Economics, 101 (2011), 621–640.CrossRefGoogle Scholar
El Ghoul, S.; Guedhami, O.; Kwok, C. C. Y.; and Mishra, D. R.. “Does Corporate Social Responsibility Affect the Cost of Capital?” Journal of Banking and Finance, 35 (2011), 2388–2406.CrossRefGoogle Scholar
Ferrell, A.; Liang, H.; and Renneboog, L.. “Socially Responsible Firms.” Journal of Financial Economics, 122 (2016), 585–606.CrossRefGoogle Scholar
Flammer, C. “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach.” Management Science, 61 (2015), 2549–2568.CrossRefGoogle Scholar
Friedman, M. “The Social Responsibility of Business is to Increase its Profits.” New York Times Magazine, Sept. 13, https://www.nytimes.com/1970/09/13/archives/article-15-no-title.html (1970).Google Scholar
Gormley, T. A., and Matsa, D. A.. “Common Errors: How to (and not to) Control for Unobserved Heterogeneity.” Review of Financial Studies, 27 (2014), 617–661.CrossRefGoogle Scholar
Greening, D. W., and Turban, D. B.. “Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce.” Business & Society, 39 (2000), 254–280.CrossRefGoogle Scholar
Gregg, P; Grout, P. A.; Ratcliffe, A.; Smith, S.; and Windmeijer, F.. “How Important is Pro-Social Behaviour in the Delivery of Public Services?” Journal of Public Economics, 95 (2011), 758–766.CrossRefGoogle Scholar
Hart, O., and Zingales, L.. “Companies Should Maximize Shareholder Welfare Not Market Value.” Journal of Law, Finance, and Accounting, 2 (2017), 247–275.CrossRefGoogle Scholar
Hwang, S. W.; Gogosis, E.; Chambers, C.; Dunn, J. R.; Hoch, J. S.; and Aubry, T.. “Health Status, Quality of Life, Residential Stability, Substance Use, and Health Care Utilization Among Adults Applying to a Supportive Housing Program.” Journal of Urban Health, 88 (2011), 1076–1090.CrossRefGoogle ScholarPubMed
Imbens, G. W., and Wooldridge, J. M.. “Recent Developments in the Econometrics of Program Evaluation.” Journal of Economic Literature, 47 (2009), 5–86.CrossRefGoogle Scholar
Institute of Medicine (US) Committee on Health Care for Homeless People. Homelessness, Health, and Human Needs. Washington, DC: National Academies Press (1988). Available from: https://www.ncbi.nlm.nih.gov/books/NBK218232/.Google Scholar
Jones, D. A.; Willness, C. R.; and Madey, S.. “Why are Job Seekers Attracted by Corporate Social Performance? Experimental and Field Tests of Three Signal-Based Mechanisms.” Academy of Management Journal, 57 (2014), 383–404.CrossRefGoogle Scholar
Karpoff, J. M. “On a Stakeholder Model of Corporate Governance.” Financial Management, 50 (2021), 321–343.CrossRefGoogle Scholar
Karpoff, J. M.; Lee, D. S.; and Martin, G. S.. “The Cost to Firms of Cooking the Books.” Journal of Financial and Quantitative Analysis, 43 (2008), 581–612.CrossRefGoogle Scholar
Kim, Y.; Park, M.; and Wier, B.. “Is Earnings Quality Associated with Corporate Social Responsibility?” Accounting Review, 87 (2012), 761–796.CrossRefGoogle Scholar
Koh, P.-S.; Qian, C.; and Wang, H.. “Firm Litigation Risk and the Insurance Value of Corporate Social Responsibility.” Strategic Management Journal, 35 (2014), 1464–1482.CrossRefGoogle Scholar
Krüger, P. “Corporate Goodness and Shareholder Wealth.” Journal of Financial Economics, 115 (2015), 304–329.CrossRefGoogle Scholar
Kushel, M. B.; Perry, S.; Bangsberg, D.; Clark, R.; and Moss, A. R.. “Emergency Department Use Among the Homeless and Marginally Housed: Results From a Community-Based Study.” American Journal of Public Health, 92 (2002), 778–784.CrossRefGoogle ScholarPubMed
Liang, H., and Renneboog, L.. “On the Foundations of Corporate Social Responsibility.” Journal of Finance, 72 (2017), 853–910.CrossRefGoogle Scholar
Liang, H., and Renneboog, L.. “Corporate Social Responsibility and Sustainable Finance: A Review of the Literature.” Finance Working Paper No. 701/2020, European Corporate Governance Institute (2020).CrossRefGoogle Scholar
Lins, K. V.; Servaes, H.; and Tamayo, A.. “Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility During the Financial Crisis.” Journal of Finance, 72 (2017), 1785–1824.CrossRefGoogle Scholar
Long, E.; Chen, K.; and Ryne, R.. “Political Storms: Emergent Partisan Skepticism of Hurricane Risks.” Working Paper, available at ssrn.com/abstract=3339723 (2019).CrossRefGoogle Scholar
Luo, X., and Bhattacharya, C. B.. “Corporate Social Responsibility, Customer Satisfaction, and Market Value.” Journal of Marketing, 70 (2006), 1–18.CrossRefGoogle Scholar
Luo, X., and Du, S.. “Exploring the Relationship Between Corporate Social Responsibility and Firm Innovation.” Marketing Letters, 26 (2015), 703–714.CrossRefGoogle Scholar
Mackey, A.; Mackey, T. B.; and Barney, J. B.. “Corporate Social Responsibility and Firm Performance: Investor Preferences and Corporate Strategies.” Academy of Management Review, 32 (2007), 817–835.CrossRefGoogle Scholar
Masulis, R. W., and Reza, S. W.. “Agency Problems of Corporate Philanthropy.” Review of Financial Studies, 28 (2015), 592–636.CrossRefGoogle Scholar
Matten, D.; Crane, A.; and Chapple, W.. “Behind the Mask: Revealing the True Face of Corporate Citizenship.” Journal of Business Ethics, 45 (2003), 109–120.CrossRefGoogle Scholar
Ortiz-de-Mandojana, N., and Bansal, P.. “The Long-Term Benefits of Organizational Resilience Through Sustainable Business Practices.” Strategic Management Journal, 37 (2016), 1615–1631.CrossRefGoogle Scholar
Pástor, L.; Stambaugh, R. F.; and Taylor, L. A.. “Sustainable Investing in Equilibrium.” Journal of Financial Economics, 142 (2021), 550–571.CrossRefGoogle Scholar
Rieke, K.; Smolsky, A.; Bock, E.; Erkes, L. P.; Porterfield, E.; and Watanabe-Galloway, S.. “Mental and Nonmental Health Hospital Admissions Among Chronically Homeless Adults Before and After Supportive Housing Placement.” Social Work in Public Health, 30 (2015), 496–503.CrossRefGoogle ScholarPubMed
Servaes, H., and Tamayo, A.. “The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness.” Management Science, 59 (2013), 1045–1061.CrossRefGoogle Scholar
Sun, W., and Cui, K.. “Linking Corporate Social Responsibility to Firm Default Risk.” European Management Journal, 32 (2014), 275–287.CrossRefGoogle Scholar
Vishwanathan, P.; van Oosterhout, H. (J.); Heugens, P. P. M. A. R.; Duranc, P.; and van Essen, M.. “Strategic CSR: A Concept Building Meta-Analysis.” Journal of Management Studies, 57 (2020), 314–350.CrossRefGoogle Scholar