Relationship of Managerial Ability, Corporate Social Responsibility, and Operating Performance

Abstract

This paper examines the extent to which managerial ability affects CSR activities and \noperating performance. We find that managers with higher ability are less inclined to engage \nin CSR activities but have superior CSR performance. We also find that managers with higher \nability who invest in CSR increase firm operating performance. Moreover, managers with \nhigher ability engaging in positive (negative) CSR activities will increase (decrease) the \noperating performance due to sales revenue increase (decrease) and operating costs and \nexpenses decrease (increase). We conduct the two-stage regressions to control for potential \nendogeneity concerns, and the findings of our analysis are robust. \n\nKey words: Managerial ability, corporate social responsibility, operating performance