Journal
JOURNAL OF BUSINESS ETHICS
Volume 107, Issue 4, Pages 409-422Publisher
SPRINGER
DOI: 10.1007/s10551-011-1046-z
Keywords
Agency theory; Community-based performance; Corporate governance; Organizational slack; Stakeholder theory
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Recent perspectives on community investments suggest that they are opportunities for firms to create value for shareholders and other stakeholders. However, many corporate managers are still influenced by a widely held belief that such investments erode profits and are therefore unjustifiable from an agency perspective. In this paper, we refine and test theory regarding countervailing forces that influence community-based firm performance. We hypothesize that high levels of available slack will be associated with higher community-based performance, but that this relationship will be moderated by three important governance variables: board independence, investment fund ownership, and CEO ownership. We find support for our hypotheses in longitudinal study of a large sample of U.S. corporations.
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