Corporation social responsibility and dynamic agency under jump risk

Abstract

In this paper, we attempt to clarify how agency conflicts affect the firm’s corporation social responsibility (CSR, henceforth) implementation level by developing a dynamic agency model. Numerical results demonstrate that agency conflicts make the level of CSR lower than that without an agency problem. The optimal level of CSR is high and positive only when it is close to the optimal compensation payoff boundary. Moreover, various factors that may affect the optimal level of CSR are investigated.