However Humphrey et al 2012 did not find any signif icant association By using

However humphrey et al 2012 did not find any signif

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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 the cost of debt. However, using the Euro bond market, Menz ( 2010 ) demonstrated that risk premium is higher for CSR firms, although the relationship appears to be marginal. Using U.S. data, Cheng et al. ( 2012 ) found that firms with superior CSR performance have better access to finance, and the relationship is driven primarily by the environ- mental dimension of CSR. Researchers have also reported that CSR activities reduce not only social risks but also operational, litigation, product, and technology-related risks (Starks, 2009 ). Using the real-option theory, Husted ( 2005 ) has suggested that CSR performance is negatively related to a firm’s ex ante downside business risk. Thus, CSR activities improve risk management, which ultimately has a positive effect on the value of the firm. CSR and Product Market Benefits Researchers have investigated the effects of CSR not only on the financial market, but also on the product market. Those studies that have focused on the effects of CSR on product market or consumer behavior (Murray & Vogel, 1997 ; Brown & Dacin, 1997 ; Ogden & Watson, 1999 ; Manaktola & Jauhari, 2007 ; Singh et al., 2008 ). Some research has demonstrated that CSR reasonably enables a firm to expand its 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 sales as well as in increased profitability (Brown and Dacin, 1997 ; Lev et al., 2010 ). Increased sales and increased profitability results in higher economic value for the firms. Lindorff et al. ( 2012 ) have suggested that firms in controversial sectors are able to contribute to society in the same manner as firms conducting business in mainstream sectors. Controversial sectors include gambling, alcohol, tobacco, abortion, prostitution, etc. These are also known as ‘‘sin-firms‘‘ in the literature. Thus, not only mainstream business sectors, but also controversial business sectors, can realize benefits from high-quality CSR performance. CSR, Executive Compensation, and Employment Market Benefits In addition to capital market and product market benefits, the literature has also revealed that strong CSR performance can result in employee benefits (Tuzzolino & Armandi, 1981 ; Trevino & Nelson, 2004 ; Valentine & Fleischman, 2008 ). Researchers have documented that CSR activities improve employee morale (Solomon and Hanson, 1985 ). Different CSR provisions, such as meeting labor union demands, providing better health care and retirement benefits, and paying wages above the market level, help to increase employee productivity. These in turn assist firms in building a reputation as a good employer, which attracts better talent and motivates personnel (Roberts & Dowling, 2002 ; Ed- mans, 2011 ). Improved employee productivity, job satis- faction, and employee motivation lead to better operating performance (Banker and Mashruwala, 2007 ). Better oper-
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