Date of Degree


Document Type


Degree Name





Armen Hovakimian

Committee Members

Terrence F. Martell

Mehmet Ozbilgin

Subject Categories

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance | Finance | Finance and Financial Management


corporate social responsibility, valuation, sustainability disclosure, corporate finance, disclosure regulations, capital structure


This dissertation consists of three chapters:

Chapter 1: The Effects of Corporate Social Performance and Social Norms on Market Valuation of Nonfinancial Disclosures Using a novel measure of the quality of corporate social responsibility (CSR) disclosures by global companies, this paper analyzes how CSR report quality affects firm value when mediating roles of social pressure and CSR performance are considered. I find that firms operating in socially controversial industries enjoy higher valuations when they issue high-quality CSR reports. I also find that for firms with poor CSR performance, higher-quality CSR disclosure is associated with a decline in firm value, while this negative association is mitigated for firms with superior CSR performance. These results indicate that CSR disclosure quality is priced by the market over and above CSR performance and the act of CSR disclosure.

Chapter 2: Firm Value, Legal Environment, and Corporate Social Responsibility Disclosure Regulations I study valuation implications of Corporate Social Responsibility (CSR) disclosure quality in countries with strong and weak legal systems. I find that CSR disclosure quality has a negative impact on firm value when CSR reporting is regulated and the legal system in place is strong. By contrast, CSR disclosure quality has a positive impact on firm value when CSR disclosure is regulated and the legal system is weak. I interpret these results as disclosure regulations partially making up for lack of adequate legal system strength to induce credible disclosures to benefit firm value. CSR disclosure regulations do not have as much a role to play in countries with strong legal systems, which already foster disclosure credibility. Instead, CSR disclosure regulations impair the discretion firms could exercise in choosing a judicious level of disclosure quality to improve firm value.

Chapter 3: Does Corporate Responsibility Affect Firm Leverage? The Roles of Environmental Risk Management and Stakeholder Relations on Capital Structure This paper investigates the impact of a firm’s corporate social and environmental activities on its capital structure decisions. I find that firms with superior environmental corporate responsibility (CR) and poor social CR activities hold significantly higher leverage. However, a strong environmental commitment completely dominates the leverage impact of CR for firms that excel in both social and environmental CR. This result is also valid for firms with high cash flow volatility and taxable income, consistent with the risk reduction benefits associated with pursuing a proactive environmental program. Furthermore, environmental commitment mostly preserves its impact on leverage even when the incentives to maintain better stakeholder (social) relations are paramount relative to good environmental reputation, such as for firms producing unique products or those with high liquidation risk, as predicted by the stakeholder theory of capital structure. These results underscore the material impact of environmental management policies, alongside social relations, on corporate financing decisions, and thus extend the stakeholder theory of capital structure beyond its initial conceptualization to cover the role of a firm’s broader CR orientation on financial leverage.