Commitment to build trust by socially responsible firms: Evidence from cash holdings

Ching Hung Chang; Sheng Syan Chen; Yan Shing Chen; Shu Cing Peng

doi:10.1016/j.jcorpfin.2019.03.004

Commitment to build trust by socially responsible firms: Evidence from cash holdings

Ching Hung Chang, Sheng Syan Chen, Yan Shing Chen, Shu Cing Peng

Department of Finance

Research output: Contribution to journal › Article › peer-review

25 Scopus citations

Abstract

We show that socially responsible firms use cash as a commitment device to honor implicit commitments to stakeholders. Firms with better social performance hold higher cash balances, especially for firms with social performance related to stakeholders or requiring cash spending. This relation is also stronger for firms that benefit more from social performance, e.g., firms that face more competition in product and labor markets. Social performance related to stakeholders or requiring cash spending increases the marginal value of cash.

Original language	English
Pages (from-to)	364-387
Number of pages	24
Journal	Journal of Corporate Finance
Volume	56
DOIs	https://doi.org/10.1016/j.jcorpfin.2019.03.004
State	Published - Jun 2019

Keywords

Cash holdings
Corporate social responsibility
Stakeholder theory
Value of cash

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1016/j.jcorpfin.2019.03.004

Cite this

@article{3d02ec9384664300a559893691d92b8d,

title = "Commitment to build trust by socially responsible firms: Evidence from cash holdings",

abstract = "We show that socially responsible firms use cash as a commitment device to honor implicit commitments to stakeholders. Firms with better social performance hold higher cash balances, especially for firms with social performance related to stakeholders or requiring cash spending. This relation is also stronger for firms that benefit more from social performance, e.g., firms that face more competition in product and labor markets. Social performance related to stakeholders or requiring cash spending increases the marginal value of cash.",

keywords = "Cash holdings, Corporate social responsibility, Stakeholder theory, Value of cash",

author = "Chang, {Ching Hung} and Chen, {Sheng Syan} and Chen, {Yan Shing} and Peng, {Shu Cing}",

note = "Publisher Copyright: {\textcopyright} 2019 Elsevier B.V.",

year = "2019",

month = jun,

doi = "10.1016/j.jcorpfin.2019.03.004",

language = "???core.languages.en_GB???",

volume = "56",

pages = "364--387",

journal = "Journal of Corporate Finance",

issn = "0929-1199",

}

TY - JOUR

T1 - Commitment to build trust by socially responsible firms

T2 - Evidence from cash holdings

AU - Chang, Ching Hung

AU - Chen, Sheng Syan

AU - Chen, Yan Shing

AU - Peng, Shu Cing

PY - 2019/6

Y1 - 2019/6

N2 - We show that socially responsible firms use cash as a commitment device to honor implicit commitments to stakeholders. Firms with better social performance hold higher cash balances, especially for firms with social performance related to stakeholders or requiring cash spending. This relation is also stronger for firms that benefit more from social performance, e.g., firms that face more competition in product and labor markets. Social performance related to stakeholders or requiring cash spending increases the marginal value of cash.

AB - We show that socially responsible firms use cash as a commitment device to honor implicit commitments to stakeholders. Firms with better social performance hold higher cash balances, especially for firms with social performance related to stakeholders or requiring cash spending. This relation is also stronger for firms that benefit more from social performance, e.g., firms that face more competition in product and labor markets. Social performance related to stakeholders or requiring cash spending increases the marginal value of cash.

KW - Cash holdings

KW - Corporate social responsibility

KW - Stakeholder theory

KW - Value of cash

UR - http://www.scopus.com/inward/record.url?scp=85073142592&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2019.03.004

DO - 10.1016/j.jcorpfin.2019.03.004

M3 - 期刊論文

AN - SCOPUS:85073142592

SN - 0929-1199

VL - 56

SP - 364

EP - 387

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

ER -

Commitment to build trust by socially responsible firms: Evidence from cash holdings

Abstract

Keywords

UN SDGs

Access to Document

Fingerprint

Cite this