The Double-Edged Role of CSR Awards: Value Creation or Market Penalty?

Abstract

This research explores how corporate social responsibility (CSR) awards influence firm performance, using data from 397 Malaysian companies across 13 sectors between 2018 and 2021. Although CSR awards are frequently seen as evidence of ethical excellence, their economic impact remains unclear. Building on Agency Theory, we argue that managers may prioritise CSR recognition to advance personal reputations rather than shareholder wealth, creating costs that reduce market valuation. Social role theory views firms as social actors, suggesting that awards can strengthen legitimacy, morale and reputation among stakeholders. In contrast, Signalling theory implies that awards may function as symbolic gestures, potentially interpreted as greenwashing. To separate true effects from confounding factors, the study applies the potential outcomes framework. Empirical findings reveal that while CSR awards are associated with a decline in market value, strong Environmental, Social and Governance (ESG) performance and female Chief Financial Officer (CFO) leadership improve operational returns (Return on Assets [ROA]). The results underscore a paradox: CSR awards can foster internal efficiency and credibility but do not reliably enhance market performance. This study advances CSR research by integrating multiple theoretical perspectives and highlighting the importance of transparent communication to align social recognition with investor expectations.