Your research takes a unique view of corporate social responsibility (CSR). What got you interested in this subject in the first place?
The intersection between the business world and the broader issues of ethics and morality is something I have always been interested in. One of the hot topics that people are discussing in recent years, from the McKinsey Quarterly to CSR-devoted blogs in Forbes, is whether companies that pursue environmental and social initiatives (often popularly labelled as “sustainability initiatives”), if companies engage with several stakeholders and are involved in their local communities, do all or any of such initiatives have a direct impact on financial performance? Is that somehow reflected in their profits? In other words, do such CSR initiatives create real economic value?
It has been very difficult empirically for academics to find any causal relationship. My co-author, George Serafeim from Harvard Business School, and I began thinking about this. We thought that if indeed there is a link between CSR and profitability, then by the time CSR information gets to the capital markets, we should be able to potentially trace the process of value-creation through intermediate steps. The idea being that CSR information does not magically transfer from firms to capital markets but instead, a number of important information intermediaries and institutions are involved in the information dissemination process.
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