Is Venture Capital Socially Responsible? The Effect of VC Funding on Companies

Sinan Goktan, Professor of Department of Accounting & Finance

This study explores how corporate social responsibility (CSR) initiatives are guided by prior relationships with venture capital (VC) firms. We argue that VC-backed companies are less likely to adopt CSR practices due to the imprinting of short termism but time and VC investment characteristics moderate this relationship. We find that VC-backed companies have poorer CSR records and that their average CSR records improve in time but this improvement is significantly less for VC-backed (versus non-VC-backed) companies. However, when VC-backed companies receive funding from younger firms that specialize in socially responsible investing or from university-based VC funds, their CSR records improve.

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Presentation recorded on February 14, 2019 at California State University East Bay.

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