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<p>Studies on the relationship between corporate social responsibility (CSR) and firm value have reported mixed findings, often due to endogeneity issues and a lack of clarity with respect to the mechanisms linking CSR to firm performance. Using data from Japanese listed companies between 2010 and 2017, this study reexamines this relationship by focusing on the heterogeneous effects of Sanpo-yoshi, a traditional business ethic which has been deeply rooted in Japan’s corporate culture for over three centuries. First, firm-fixed effects regression results show that CSR has a positive impact on both firm value and labor productivity. Mediation analysis confirms that labor productivity partially explains the CSR–firm value link, with supporting evidence from Sobel tests and GMM IV regressions. To address endogeneity, we use the geographic distance from a CEO’s birthplace to Shiga Prefecture—origin of the Sanpo-yoshi business philosophy—as an instrumental variable. Furthermore, we investigate which human resource investments contribute to increased labor productivity and, therefore, firm value. Our findings show that while increasing the representation of Female Directors has no significant impact on firm value, prioritizing the employment of female workers and implementing initiatives to support them can significantly enhance both firm value and productivity. Given the corporate governance reforms that have aimed to promote board diversity and improve firm value since 2014, as well as the enactment of the <i>Act on Promotion of Women’s Participation and Advancement in the Workplace</i> in 2016, these results carry timely and valuable policy implications.</p>

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The relationship between corporate social responsibility and firm value as mediated by labor productivity

  • 期刊论文

  • 发表日期：

    2025年6月12日

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  • Shujie Sun,
  • Zehui Guo,
  • Jian Wang,
  • Keikoh Ryu,
  • Pengda Fan,
  • Xuepeng Qian

摘要

Studies on the relationship between corporate social responsibility (CSR) and firm value have reported mixed findings, often due to endogeneity issues and a lack of clarity with respect to the mechanisms linking CSR to firm performance. Using data from Japanese listed companies between 2010 and 2017, this study reexamines this relationship by focusing on the heterogeneous effects of Sanpo-yoshi, a traditional business ethic which has been deeply rooted in Japan’s corporate culture for over three centuries. First, firm-fixed effects regression results show that CSR has a positive impact on both firm value and labor productivity. Mediation analysis confirms that labor productivity partially explains the CSR–firm value link, with supporting evidence from Sobel tests and GMM IV regressions. To address endogeneity, we use the geographic distance from a CEO’s birthplace to Shiga Prefecture—origin of the Sanpo-yoshi business philosophy—as an instrumental variable. Furthermore, we investigate which human resource investments contribute to increased labor productivity and, therefore, firm value. Our findings show that while increasing the representation of Female Directors has no significant impact on firm value, prioritizing the employment of female workers and implementing initiatives to support them can significantly enhance both firm value and productivity. Given the corporate governance reforms that have aimed to promote board diversity and improve firm value since 2014, as well as the enactment of the Act on Promotion of Women’s Participation and Advancement in the Workplace in 2016, these results carry timely and valuable policy implications.