The Politics of CSR Activity: Evidence from Press Releases

I study whether firms use corporate social responsibility ("CSR") activity to strengthen relationships with senators who prioritize CSR policy areas. I predict that when senators prioritize CSR issues, constituent firms increase CSR activity to give senators opportunities to claim credit for CSR developments in local communities. By doing so, firms strengthen relationships with senators and can avoid future political costs. I measure senator CSR priorities by whether they chair a CSR-related Senate committee. I introduce a novel measure of corporate CSR activity based on the textual analysis of press releases. Triangulating across my analyses, I find that when a senator chairs a CSR-related committee, constituent firms become more likely to issue CSR press releases and issue more of them. This response is driven by press releases about less costly activity, suggesting firms use CSR press releases strategically to create a positive CSR perception. In states with more local newspapers where issuing press releases may lead to increased media coverage, the primary association is more pronounced. I find evidence for my prediction in a difference-in-differences design where I exploit plausibly exogenous departures of senators from CSR-related committees.