Which Dimension of Corporate Social Responsibility is a Value Driver in the Oil and Gas Industry?

• Published date: 01 June 2019
• Date: 01 June 2019
• Author: Simon Ennis,Dongseop Chung,Sungchul Choi,Reza H. Chowdhury
• DOI: http://doi.org/10.1002/cjas.1492

Which Dimension of Corporate Social

Responsibility is a Value Driver in the Oil and Gas

Industry?

Reza H. Chowdhury*

University of Northern British Columbia

Sungchul Choi

University of Northern British Columbia

Simon Ennis

University of Northern British Columbia

Dongseop Chung

Kyungsung University

Abstract

The oil and gas (O&G) industry suffers from a negative

perception of poor sustainability. O&G companies are

therefore engaged in several socially sustainable activities

related to community development and environmental

protection. This article determines whether the social,

environmental, and economic dimensions of corporate

social responsibility (CSR) are equally value-additive to

O&G companies. We measure the company-specif‌ic level

of CSR activities from the information provided in the

annual f‌inancial reports of O&G companies and

determine the effects of CSR dimensions on f‌irm value.

We f‌ind that CSR enhances f‌irm value of O&G companies.

While social activities such as employee well-being and

community development are key value-drivers, environ-

mental and economic sustainable activities have an insig-

nif‌icant impact on the market value of O&G companies.

Copyright © 2018 ASAC. Published by John Wiley &

Sons, Ltd

Keywords: annual report, corporate social responsibility,

f‌irm value, oil and gas industry

Résumé

L’industrie pétrolière et gazière (O&G) souffre de la

perception négative qu’on a de sa faible durabilité. C’est

pourquoi les sociétés du secteur pétrolier et gazier

s’investissent dans plusieurs activités socialement durables

liées au développement communautaire et à la protection

environnementale. Dans cet article, nous nous interrogeons

sur la valeur ajoutée liée aux dimensions sociales,

environnementales et économiques de la responsabilité

sociale des entreprises (CSR) de ce secteur. Nous mesurons

le niveau d’activité de la CSR de l’entreprise à partir des in-

formations disponibles dans les rapports f‌inanciers annuels

des sociétés pétrolières et gazières et déterminons les effets

des dimensions de la CSR sur la valeur de l’entreprise. Les

résultats montrent que la CSR augmente la valeur des

sociétés pétrolières et gazières. Par ailleurs, tandis que les

activités sociales telles que le bien-être des employés et le

développement communautaire sont des facteurs clés de

valeur, les activités environnementales et économiques

durables n’ont qu’une incidence négligeable sur la valeur

marchande des sociétés pétrolières et gazières Copyright ©

2018 ASAC. Published by John Wiley & Sons, Ltd

Mots-clés: rapport annuel, responsabilité sociale des

entreprises, valeur de l’entreprise, industrie pétrolière et

gazière

Introduction

Some industries inherently raise social and environmen-

tal issues. There is a general concern about how companies

in controversial industries gain legitimacy through their pol-

icies and initiatives related to corporate social responsibility

(CSR). The literature has just begun to explore this area by

analyzing the signif‌icance of CSR on f‌inancial performance

(FP) in such industries (Lindorff, Jonson, & McGuire,

2012). Cai, Jo, and Pan (2012), for instance, show a positive

impact of CSR engagement on the f‌irm value of American

companies in eight controversial industries. Rodrigo, Duran,

and Arenas (2016), however, suggest that theoretical and

*Please address correspondence to: Reza H. Chowdhury, School of Busi-

ness, University of Northern British Columbia, 3333 University Way,

Prince George, British Columbia, V2N 4Z9, Canada. Email: reza.

chowdhury@unbc.ca

Canadian Journal of Administrative Sciences

Revue canadienne des sciences de l’administration

36: 260–272 (2019)

Published online 30 March 2018 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1492

Can J Adm Sci

36(2), 260–272 (2019)Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd. 260