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Rev Manag Sci (2015) 9:89114
DOI 10.1007/s11846-014-0120-1
ORIGINAL PAPER
Jennifer Martnez-Ferrero
Isabel-Mara Garca-Snchez
Received: 16 December 2013 / Accepted: 6 February 2014 / Published online: 8 March 2014 Springer-Verlag Berlin Heidelberg 2014
Abstract By using international data, we analyze the effect of managerial discretion on socially responsible practices with the aim of demonstrating the use of corporate social responsibility (CSR) as an entrenchment strategy in order to conceal unethical behavior. The results conrm the positive relationship between managerial discretion and CSR. Therefore, by employing CSR, a companys managers that employ poor accounting practices attempt to compensate stake-holders. We also demonstrate that institutional factors inuence the above relationship. Concretely, the entrenchment strategy is moderated by the stakeholder protection in the country of origin and CSR dimension analyzed.
Keywords Managerial discretion Corporate social responsibility
Stakeholder protection
Mathematics Subject Classication 62 07
1 Introduction
This research has a double purpose. First, our aim is to analyze the possible existence of a CSR entrenchment strategy with the intention of masking previous managerial discretion. Secondly, we examine how the CSR entrenchment strategy covaries within iurrocanstitutional factors.
J. Martnez-Ferrero (&) I.-M. Garca-Snchez
Facultad de economa y empresa, University of Salamanca, Edicio FES. Campus de Unamuno, 37007 Salamanca, Spaine-mail: [email protected]
I.-M. Garca-Snchez e-mail: [email protected]
Is corporate social responsibility an entrenchment strategy? Evidence in stakeholder protection environments
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On the one hand, managers discretionary behaviors are an underlying agency problem that enable managers to satisfy their own interests to the detriment of those of others, regardless of the potential damage not only to other stakeholders, but also to the companys own nancial performance should such practices continue for a prolonged time. In order to avoid the negative consequences of discretionary decision-making, managers may adopt corporate social responsibility (CSR) practices that satisfy the interests of different stakeholders.
Meanwhile, these CSR practices aim to achieve a threefold impactsocial, economic and environmental (Adams and Zutshi 2004)through the development of environmental protection systems and policies and the exercise of actions promoting relations with the community, customers or suppliers in order to benet both the company and the diverse stakeholders that affect and are affected by it (Adams 2002; Waddock 2003). This responsible behavior aims to resolve the conict of interests between...