Exploring the Relation of CSR Activities With Operating Activities: Cost Asymmetry and Asymmetric Sales Response

We explore the relation of CSR activities with SG&A cost stickiness and asymmetric sales response by using a data sample of 7.464 firm-year observations of European firms for the period 2009-2015. Our empirical findings indicate that SG&A expenses exhibit cost stickiness (anti-stickiness) in the case of firms with high (low) intensity of CSR activities. Depending on a firm’s intensity on CSR activities, it seems that sales revenues exhibit asymmetric responses towards different directions on the changes of SG&A expenses. The asymmetric sot behaviour of SG&A expenses and the asymmetric sales response are also affected by the extent that CSR activities are anchored with investing or signalling profile. A possible explanation is that firms with high intensity of CSR activities tend to focus on improving long term growth, they adopt a prospector’s strategy and they are characterised with high intensity of intangible investments.