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How has CSR changed since Milton Friedman ignited the debate 50 years ago? This September, virtual audiences gathered to explore that question at Corporate Social Responsibility Revisited, a new global virtual conference from Chicago Booth marking the 50th anniversary of Friedman’s landmark op-ed in the New York Times.

Here, we present further resources from Chicago Booth on CSR that we hope can inspire further insights and dialogue well after the conference concludes. Browse the links below to find research and working papers from our world-class faculty, insights from Chicago Booth Review, and installments of the Stigler Center’s ProMarket blog and Capitalisn’t podcast.

Use the links below to jump to a particular section:

Faculty Research and Working Papers

Companies Should Maximize Shareholder Welfare Not Market Value

By Oliver Hart and Luigi Zingales

Abstract: What is the appropriate objective function for a firm? We analyze this question for the case where shareholders are prosocial and externalities are not perfectly separable from production decisions. We argue that maximization of shareholder welfare is not the same as maximization of market value. We propose that company and asset managers should pursue policies consistent with the preferences of their investors. Voting by shareholders on corporate policy is one way to achieve this.

Exit vs. Voice

By Eleonora Broccardo, Oliver Hart, and Luigi Zingales

Abstract: We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies. We show that in a competitive world exit is less effective than voice in pushing firms to act in a socially responsible manner. Furthermore, we demonstrate that individual incentives to join an exit strategy are not necessarily aligned with social incentives, whereas they are when well-diversified investors are allowed to express their voice. We discuss what social and legal considerations might sometimes make exit preferable to voice.

Is Pollution Value-Maximizing? The DuPont Case

By Roy Shapira and Luigi Zingales

Abstract: DuPont, one of the most respectable US companies, caused environmental damage that ended up costing the company around a billion dollars. By using internal company documents disclosed in trials we rule out the possibilities that this bad outcome was due to ignorance, an unexpected realization, or a problem of bad governance. The documents rather suggest that the polluting was a rational decision: under reasonable probabilities of detection, polluting was ex-ante optimal from the company’s perspective, even if the cost of preventing pollution was lower than the cost of the health damages produced. We then examine why different mechanisms of control—legal liability, regulation, and reputation—all failed to deter a behavior that was inefficient from a social point of view. One common reason for the failures of deterrence mechanisms is that the company controls most of the information and its release. We then sketch potential ways to mitigate this problem.

Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence

By Marianne Bertrand, Matilde Bombardini, Raymond J. Fisman, and Francesco Trebbi

Abstract: We explore the role of charitable giving as a means of political influence. For philanthropic foundations associated with large US corporations, we present three different identification strategies that consistently point to the use of corporate social responsibility in ways that parallel the strategic use of Political Action Committee (PAC) spending. Our estimates imply that 16.1 percent of corporate charitable giving may be politically motivated, an amount 6.2 times larger than annual PAC contributions and 90 percent of federal lobbying. Absent of disclosure requirements, charitable giving may be a form of corporate political influence undetected by voters and directly subsidized by taxpayers.

When Corporate Social Responsibility Backfires

By John A. List and Fatemeh Momeni

Abstract: Corporate Social Responsibility (CSR) has become a cornerstone of modern business practice, developing from a “why” in the 1960s to a “must” today. Early empirical evidence on both the demand and supply sides has largely confirmed CSR’s efficacy. This paper combines theory with a large-scale natural field experiment to connect CSR to an important but often neglected behavior: employee misconduct and shirking. Through employing more than 3000 workers, we find that our usage of CSR increases employee misbehavior—20 percent more employees act detrimentally toward our firm by shirking on their primary job duty when we introduce CSR. Complementary treatments suggest that “moral licensing” is at work, in that the “doing good” nature of CSR induces workers to misbehave on another dimension that hurts the firm. In this way, our data highlight a potential dark cloud of CSR, and serve to forewarn that such business practices should not be blindly applied.

From Chicago Booth Review

Chicago Booth Review publishes research-driven insights on business, policy, and markets. Visit their website to read the latest issue and sign up for their newsletter.

CEOs, You Are Free to Be Socially Responsible

In his “In-House Ethicist” column, adjunct assistant professor of behavioral science John Paul Rollert revisits Milton Friedman’s famous doctrine on profits.

Do Investors Want Companies That Are More Sustainable?

More and more companies are putting resources toward endeavors not meant to directly maximize profits, such as helping the environment or being more socially responsible. And research by Chicago Booth’s Samuel Hartzmark and Abigail Sussman suggests that most investors are fine with this—on average, investors like companies that are more sustainable.

How Corporations Use Charitable Giving to Wield Political Influence

The hundreds of millions of dollars that US corporations give through political action committees have long raised red flags about special interests buying influence over elected officials. But research suggests that companies hand out even more money through charitable foundations to curry favor with lawmakers.

Should Public Companies Do More Than Maximize Profits?

BlackRock cofounder Sue Wagner joins Chicago Booth’s Marianne Bertrand, Robert H. Gertner, and Luigi Zingales to discuss the business of business.

What Do Companies Owe Their Communities?

On this episode of the Big Question, Chicago Booth Review’s Hal Weitzman talks with Chicago Booth’s Luigi Zingales, Emily Heisley Stoeckel of the Heico Companies, and Daniel Anello of Kids First Chicago to consider what companies owe to the communities that support them.

Why Companies Shouldn’t Maximize Only Profits

Maximizing shareholder value, the central mission of many corporate boards across the United States, has become a handy defense for questionable business decisions. In the past year alone, corporate directors have cited “a fiduciary duty” to make the most possible money for shareholders as justification for cutting large numbers of jobs, price gouging patients in need of lifesaving drugs, and investing in projects that harm the environment.

Why Corporate Social Responsibility Can Backfire

Doing good can be good business, but research finds it can also trigger bad behavior.

Why We’re All Impact Investors Now

To some, socially responsible investing used to be about avoiding certain companies. Increasingly, it’s about using market tools to make a difference.

From ProMarket

A publication of Chicago Booth’s Stigler Center for the Study of the Economy and the State, the ProMarket blog aims to educate the public about the many ways special interests subvert competition in order to make the market system work better.

A Small Step for Theory, a Leap Forward in Corporate Governance

Moving from shareholder value maximization to shareholder welfare maximization may be a small step in theory, but it could trigger a leap forward in the way our corporations are run.

Dear Graduates, Here’s What You Can Do to Change Capitalism for the Better

Delivering UChicago’s 532nd Convocation address, Luigi Zingales advised young graduates to embrace their power as consumers, workers, and citizens and fight corporate monopolies.

Friedman’s Principle, 50 Years Later

In the mid-1980s, Milton Friedman’s view that the only social responsibility of business is to increase its profits became dominant in business and academia. Since the Great Financial Crisis, his views have increasingly been challenged. To mark the 50-year anniversary of Friedman’s influential NYT piece, ProMarket launched a series of articles on the shareholder-stakeholder debate.

Making Your Vote Count: Does the Voting Behavior of Asset Managers Truly Reflect Their Clients’ Interests?


In the past five years, thanks to growing public pressure, there has been increased attention on the voting behavior of asset managers. As a result, change is already taking place.

Serving Shareholders Doesn’t Mean Putting Profit Above All Else

The time has come for companies, economists, and society to abandon the argument that the only responsibility of business is to maximize profits, argue economists Oliver Hart and Luigi Zingales.

Where Friedman Was Wrong

A 2017 paper by Oliver Hart and Luigi Zingales argues that a company’s objective should be the maximization of shareholders’ welfare, not value.

From Capitalisn’t

Capitalism is the engine of prosperity. Capitalism sows the seeds of its own demise. Could both be right? Hosted by Chicago Booth’s Luigi Zingales and Georgetown’s Kate Waldock, the Capitalisn’t podcast delves into what’s working today in capitalism, and what isn’t. Subscribe on your favorite podcast app for biweekly episodes.

Pollution Pt 1: The Sticky Side of Teflon

In the first of a two-part series on pollution, Kate and Luigi discuss the health hazards and economic costs of air pollution and contaminated drinking water from the toxic chemical PFOA (C8) found in Teflon. How did DuPont skirt regulation and avoid corporate responsibility for so long?

Shareholder Vote Suppression with SEC Commissioner Rob Jackson

A common theme on this podcast is whether shareholders have too much power. But if we were going to redistribute that power, to whom should it go? Two recently proposed rule changes at the SEC would transfer more power to CEOs. But do we really want to empower managers to operate with less checks and balances? Kate and Luigi sit down with SEC Commissioner Rob Jackson to talk through these issues and debate the proposed SEC rules.

Shareholders vs. Stakeholders

Many are praising a Business Roundtable announcement that corporations should serve stakeholders as well as shareholders. On the surface, this may seem like a historic reversal of the status quo that has held since Milton Friedman's famous “shareholder primacy” theory was put forward in the 70s. But it’s not that simple. On this episode, Kate and Luigi lay out the history of this theory, revealing that it’s really been around for as long as we’ve been asking the most fundamental question in business: what is the purpose of a corporation? They explore that question, and interrogate the possible underlying motives behind the Business Roundtable’s decision.

More from the Stigler Center

The Stigler Center for the Study of the Economy and the State is one of 12 research centers at Chicago Booth. It promotes and disseminates research on regulatory capture, crony capitalism, and the various distortions that special interest groups impose on capitalism.

The Future of Corporate Governance: Proxy Voting Rules and Beyond

In January 2020, the Stigler Center hosted a discussion on new SEC rules and the future of corporate governance, featuring Booth professors Steven Kaplan and Luigi Zingales, with Nell Minow of ValueEdge Advisors. Watch the full discussion here.

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