CSR & Financial Performance Link
Allocating resources to CSR can have a:
a) negative impact on a firm
b) positive impact on a firm
c) little to no impact on a firm
d) both a and c
e) both b and c
e) both b and c
What is the Friedman Model?
The Social Responsibility of Business is to Increase Its Profits
CSR reporting leads to:
a) more information asymmetry between investor and managers
b) less information asymmetry between investor and managers
c) does not have an affect on information asymmetry between investor and managers
b) less information asymmetry between investor and managers
In which type of firms is there a positive correlation between CSR and Tobin's q?
A) Firms with few agency problems
B) Firms with many agency problems
C) Firms with low CSR performance
D) Firms with high CEO pay
A) Firms with few agency problems
Which of the following is an argument for a negative relationship between social and financial performance?
a) Firms that perform responsibly have a competitive advantage
b) Socially responsible behavior results in numerous benefits for firms
c) Socially responsible behavior has few economic benefits and numerous costs
d) Socially responsible behavior does not impact financial performance
c) Socially responsible behavior has few economic benefits and numerous costs
The model has emphasized on the internal policy goals & their relation to the CSR
Ackerman Model
What is the effect of initiating CSR disclosure with superior CSR performance on institutional investors and analyst coverage?
A) It attracts non-dedicated institutional investors and analyst coverage.
B) It has no significant effect on institutional investors and analyst coverage.
C) It attracts dedicated institutional investors and analyst coverage.
D) It repels institutional investors and analyst coverage.
C) It attracts dedicated institutional investors and analyst coverage.
What is NOT associated with higher CSR performance according to the article?
A) Abundance of cash
B) Tighter cash constraints
C) Higher pay-for-performance sensitivity
D) Excess CEO pay
A) Abundance of cash
What is the "slack resources theory" mentioned in the article?
a) The theory that firms with limited resources tend to have better CSP.
B) The theory that firms with more resources tend to have better CSP.
C) The theory that CSP is not affected by a firm's financial performance.
D) The theory that a firm's CSP can only improve if it spends all its resources on philanthropy.
B) The theory that firms with more resources tend to have better CSP.
At the bottom of the pyramid, this layer represents the goal of profit maximization through the production of goods and services.
What is the Caroll Model.
Which firms are more likely to initiate standalone CSR disclosures?
a) Firms with a high cost of equity capital in the previous year
b) Firms with a low cost of equity capital in the previous year
c) Firms with no cost of equity capital in the previous year
a) Firms with a high cost of equity capital in the previous year are significantly more likely than others to initiate standalone CSR disclosures
What is CSR positively related to according to the passage?
A) Legal protection of employee rights
B) Controlling shareholders’ expropriation of minority shareholders
C) Reduction of shareholder rights
D) Legal protection of shareholder rights
D) Legal protection of shareholder rights
What is the virtuous cycle explained in the article The Corporate Social Performance — Financial Performance Link?
Causation can run in both directions - meaning better financial performance may lead to improved CSP and better CSP may lead to improved financial performance
A businessmen has no other social responsibility to perform except to serve his shareholders & stockholders.
Friedman Model
According to the article, what is the impact of CSR disclosure on forecast errors and dispersion?
A) CSR disclosure has no significant impact on forecast errors and dispersion.
B) Analysts achieve higher absolute forecast errors and dispersion following CSR disclosure.
C) Analysts achieve lower absolute forecast errors and dispersion following CSR disclosure.
D) The study did not examine the impact of CSR disclosure on forecast errors and dispersion.
C) Analysts achieve lower absolute forecast errors and dispersion following CSR disclosure.
What is the main argument about CSR and shareholder wealth maximization in the passage?
A) CSR practices are inconsistent with shareholder wealth maximization
B) CSR practices have no impact on shareholder wealth maximization
C) Good governance causes high CSR, which is consistent with shareholder wealth maximization
D) CSR practices have a negative impact on shareholder wealth maximization
C) Good governance causes high CSR, which is consistent with shareholder wealth maximization