The Moderating Effects from Corporate Governance Characteristics on the Relationship Between Available Slack and Community-Based Firm Performance
Jeffrey S. Harrison, Joseph E. Coombs
Journal of Business Ethics · 2012 · Volume 107 · Issue 4
DOI: 10.1007/s10551-011-1046-z
Abstract
Recent perspectives on community investments suggest that they are opportunities for firms to create value for shareholders and other stakeholders. However, many corporate managers are still influenced by a widely held belief that such investments erode profits and are therefore unjustifiable from an agency perspective. In this paper, we refine and test theory regarding countervailing forces that influence community-based firm performance. We hypothesize that high levels of available slack will be associated with higher community-based performance, but that this relationship will be moderated by three important governance variables: board independence, investment fund ownership, and CEO ownership. We find support for our hypotheses in longitudinal study of a large sample of U.S. corporations.
Keywords
Agency theory, Community-based performance, Corporate governance, Organizational slack, Stakeholder theory
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