How do corporate social responsibility activities influence corporate reputation? Evidence from Korean firms

This study applies the stakeholder theory and explores how corporate social responsibility (CSR) activities are associated with corporate reputation. In particular, we investigate how charitable contributions and toxic emissions as proxies for CSR activities are related with shareholder returns as a proxy for corporate reputation. This study employs a sample of Korean firms reported in the Korea sustainability index database between 2010 and 2012. The results find that charitable contributions and toxic emissions are positively and negatively related with shareholder returns, respectively. In addition, the results show that current shareholder returns are likely to be influenced by past charitable contributions and toxic emissions, suggesting that firms may develop current reputational competences by leveraging on past CSR activities.