Is Privatization a Socially Responsible Reform

This paper assesses the corporate social responsibility (CSR) of newly privatized firms (NPFs). Using data from 41 countries over the 2002-2010 period, we find strong evidence that NPFs have better CSR performance than other publicly listed firms. Controlling for firm- and country-level variables, state ownership has a negative impact, while foreign and employee ownership have positive impacts, on CSR performance in NPFs. We also find that country-level institutions influence the relationship between ownership structure and CSR performance in NPFs. In additional analyses, we find that NPFs benefit from higher valuation and lower equity financing costs through improved CSR.