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

HBR Blog Network / The Daily Stat

by Andrew O’Connell  |   8:30 AM January 9, 2014

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.