Abstract/Summary

This thesis adds to the expanding body of research on corporate social responsibility (CSR) and corporate culture. In Chapters 2, 3 and 4, we conduct empirical investigations to explore the impact of these intangible assets on corporate performance on the one side, and companies’ incentives towards key cultural changes on the other side. More specifically, the first study in Chapter 2 examines how CSR mitigates the impact of political uncertainty on stock prices. The findings reveal that firms with superior CSR performance, particularly in terms of stakeholder engagement, display a better performance during periods of higher political uncertainty associated to local elections. This effect is more significant in closely contested elections with a higher degree of unpredictability. The results remained robust after addressing potential issues of endogeneity and are not affected by the outcome of the elections or by political donations made by the firms. To explore incentives, the second study in Chapter 3 examines how and whether firms adjust their culture after a merger. We find that acquirers with a higher cultural gap with their targets tend to undergo more pronounced cultural changes post-merger and narrow this gap. The results are particularly pronounced after stock swap deals, which evidence the cultural influence of ‘inherited’ target-firm’s shareholders, and when the target firm is characterised by stronger employee power, which underscores the cultural influence of retained target firm’s employees into the newly-combined firm. In addition, we observe that cultural differences in domestic mergers can lead to synergy gains and enhance the long-term operational performance of the combined firm. The third study in Chapter 4 narrows the focus on one employee aspect of CSR: work-form-home (WFH). We examine which firm-level characteristics facilitate the increasingly popular shift in work patterns after the COVID-19 pandemic, beyond industry-specific effects. While leadership characteristics and governance do not seem to matter much with all controls in place, a corporate culture focussed on innovation and a headquarter located in a state with richer social capital and sense of trust make WFH more likely and generous. Furthermore, we find that firms with higher equity evaluations are more inclined towards flexibility when they rely more on human capital and innovation and when they are more financially constrained. After the COVID-19 pandemic, growth-driven and innovative firms choose flexibility also as a cost-saving tool.