Do Managers Do Good with Other People's Money?

2013/09/01 by Ing-Haw Cheng, Harrison Hong, Kelly Shue · 1 citation
Business, Management and Accounting · Economics, Econometrics and Finance · Mathematics · #Corporate Taxation and Avoidance #Corporate Finance and Governance #Fiscal Policy and Economic Growth #Insider #Goodness of fit #Corporate governance #Shareholder #Accounting #Agency (philosophy) #Regression discontinuity design #Business #Principal–agent problem #Dividend #Agency cost #Monetary economics #Economics #Finance #Statistics #Law #Mathematics #Political science

paper · pdf · doi:10.3386/w19432

openalex publication_date 2013/09/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04

Abstract

We find support for two key predictions of an agency theory of unproductive corporate social responsibility. First, increasing managerial ownership decreases measures of firm goodness. We use the 2003 Dividend Tax Cut to increase after-tax insider ownership. Firms with moderate levels of insider ownership cut goodness by more than firms with low levels (where the tax cut has no effect) and high levels (where agency is less of an issue). Second, increasing monitoring reduces corporate goodness. A regression discontinuity design of close votes around the 50% cut-off finds that passage of shareholder governance proposals leads to slower growth in goodness.

Citations

• Does it Pay to Be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance
• Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence
• How Much Should We Trust Differences-In-Differences Estimates?
• The Effect of Green Investment on Corporate Behavior
• The geography of giving: The effect of corporate headquarters on local charities
• Large Shareholders and Corporate Control
• Enjoying the Quiet Life? Corporate Governance and Managerial Preferences
• Testing for Altruism and Social Pressure in Charitable Giving
• Theory of the firm: Managerial behavior, agency costs and ownership structure
• Individual and Corporate Social Responsibility
• Corporate goodness and shareholder wealth
• Understanding Social Preferences with Simple Tests

Cited by

• Corporate social responsibility [wikipedia]

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