Opportunity costs and the value of corporate social responsibility: evidence from firm dividend policy

Theories of CSR value under a real-option framework suggest that the payment of dividends serves as an opportunity cost. One of the resulting predictions is that the value of CSR spending is lower for dividend paying firms. We examine this prediction empirically. While we find that CSR is positively related to firm value for both dividend payers and non-payers, CSR is roughly 50% less valuable to dividend payers than non-dividend payers.