However, Humphrey et al. (2012) did not find any signif-icant association. By using China market data, Ye & Zhang(2011) documented that CSR performance also reduces thecost of debt. However, using the Euro bond market, Menz(2010) demonstrated that risk premium is higher for CSRfirms, although the relationship appears to be marginal.Using U.S. data, Cheng et al. (2012) found that firms withsuperior CSR performance have better access to finance,and the relationship is driven primarily by the environ-mental dimension of CSR.ResearchershavealsoreportedthatCSRactivitiesreduce not only social risks but also operational, litigation,product, and technology-related risks (Starks,2009). Usingthe real-option theory, Husted (2005) has suggested thatCSR performance is negatively related to a firm’s ex antedownside business risk. Thus, CSR activities improve riskmanagement, which ultimately has a positive effect on thevalue of the firm.CSR and Product Market BenefitsResearchers have investigated the effects of CSR not only onthe financial market, but also on the product market. Thosestudies that have focused on the effects of CSR on productmarket or consumer behavior (Murray & Vogel,1997;Brown & Dacin,1997; Ogden & Watson,1999; Manaktola& Jauhari,2007; Singh et al.,2008). Some research hasdemonstrated that CSR reasonably enables a firm to expandits product market, differentiate a product from its compet-itors, and build unique brand reputation (Menon & Kahn,2003; Bloom et al.,2006). Brand equity and improved cus-tomer satisfaction driven by CSR initiatives give competi-tive advantages to the firms, which results in increased salesas well as in increased profitability (Brown and Dacin,1997;Lev et al.,2010). Increased sales and increased profitabilityresults in higher economic value for the firms.Lindorff et al. (2012) have suggested that firms incontroversial sectors are able to contribute to society in thesame manner as firms conducting business in mainstreamsectors. Controversial sectors include gambling, alcohol,tobacco, abortion, prostitution, etc. These are also knownas ‘‘sin-firms‘‘ in the literature. Thus, not only mainstreambusiness sectors, but also controversial business sectors,can realize benefits from high-quality CSR performance.CSR, Executive Compensation, and EmploymentMarket BenefitsIn addition to capital market and product market benefits, theliterature has also revealed that strong CSR performance canresult in employee benefits (Tuzzolino & Armandi,1981;Trevino & Nelson,2004; Valentine & Fleischman,2008).Researchers have documented that CSR activities improveemployee morale (Solomon and Hanson,1985). DifferentCSR provisions, such as meeting labor union demands,providing better health care and retirement benefits, andpaying wages above the market level, help to increaseemployee productivity. These in turn assist firms in buildinga reputation as a good employer, which attracts better talentand motivates personnel (Roberts & Dowling,2002; Ed-mans,2011). Improved employee productivity, job satis-faction, and employee motivation lead to better operatingperformance (Banker and Mashruwala,2007). Better oper-
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Test, Corporate social responsibility, CSR Research