Blue-State Firms Are Harmed by Their Greater Spending on Social Responsibility

January 09, 2014

Blue-State Firms Are Harmed by Their Greater Spending on Social Responsibility

U.S. corporations that lean Democratic—that have Democratic rather than Republican founders, CEOs, and directors and are based in blue states—spend $20 million more annually than Republican-leaning companies on corporate social responsibility initiatives, a gap that represents about 10% of net income, say Alberta Di Giuli of ESCP Europe in France and Leonard Kostovetsky of the University of Rochester. But high-CSR firms risk harming their long-term value: Greater CSR expenditures don’t lead to increased sales, and instead are associated with declines in return on assets and lower subsequent stock returns, the researchers say.

SOURCE: Are red or blue companies more likely to go green? Politics and corporate social responsibility.