What Drives Corporate Social Performance? International Evidence from Social, Environmental and Governance Scores

Abstract

We investigate the institutional drivers of Corporate Social Performance‟s (CSP) pillars: social, environmental and governance performance. Using a sample of firms from 42 countries, we explain 41, 46 and 63% of the variation in social, environmental, and governance performance respectively, employing observable firm, industry and institutional variables. Country institutions have a profound influence on CSP. Political institutions, followed by legal and labor market institutions are the most important determinants of social and environmental performance. In contrast, legal institutions, followed by political institutions are the most important determinants of governance. Capital market institutions appear to be less important drivers of CSP.

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