Corporate social responsibility, competition, and firm value

In this paper, we examine whether corporate social responsibility (CSR) is value-enhancing in the presence of product market competition. Using a comprehensive sample of 22,527 firm-year observations from 62 countries, we find that the value-enhancing effect of CSR is prevalent in the non-competitive industries. We examine the channels through which firms earn positive benefits of CSR and document a strong positive link between firm profitability, productivity, total factor productivity, efficiency, and CSR in non-competitive industries. Our results withstand various robustness checks and endogeneity concerns. • Corporate social responsibility (CSR) practices of firms in non-competitive industries are value enhancing. • CSR practice has a strong positive link to profitability, total factor productivity and efficiency. • Product market factor plays a key role in the relation between CSR and firm value.