Corporate Social Responsibility, Corporate Political Activities, and Firm Performance

This study examines the relationships between corporate social responsibility (CSR) (strengths and weaknesses), corporate political activities (CPA) (lobbying and campaign contributions), and firm performance of firms in regulated and nonregulated industries. We hypothesize a partially mediating model in which CSR influences CPA which, in turn, influences financial performance (ROA and Tobin’s Q). We also hypothesize a direct effect of CSR on performance. The sample includes the S&P 500 firms from 1998 to 2014. The data were collected from publicly available sources: the KLD database (KLD Strengths and Concerns), The Center for Responsive Politics (lobbying and campaign contributions), and Compustat (ROA and Tobin’s Q). The results of Generalized Least Squares (GLS) Regressions support our hypothesized model of partial mediation with government regulation as a moderating variable between CPA and firm performance.