Does firms’ corporate social responsibility reduce crime?

Abstract

This study examines the impact of firms’ corporate social responsibility (CSR) on state crime rates in the U.S. from 2004 to 2020. Our research bolsters the expanding work under the Law and Political Economy Project out of Yale University and Economics of Crime Working Group of National Bureau of Economic Research (NBER). Our empirical results show that states with domiciled firms having better CSR performance exhibit significantly lower crime rates. This lower crime incidence is driven by the environmental, social, and governance dimensions of CSR. Our study is the first to document the societal impact of CSR by analyzing state crime rates, and we conclude that CSR activities have positive externalities on society. Valuation Insight: Both exposure to crime and Corporate Social Responsibility (CSR) performance may be essential drivers of business value. This paper shows that the two are related in that states in which the firms domiciled have better CSR performance also exhibit lower crime rates.