Do Managers Do Good with Other People’s Money?

Abstract There is mixed evidence on whether the marginal dollar spent corporate social responsibility due to agency problems. We propose an approach by modeling how 2003 dividend tax cut, which increased after-tax insider ownership and better aligned managerial shareholder interests, affected firm responsibility. confirm key predictions of our model: following moderate insider-ownership firms experience larger declines in their ratings increases valuations relative other firms. also another implication regarding misalignment using a regression-discontinuity design close votes shareholder-governance proposals. (JEL G30, G31, G35) Received February 28, 2022; editorial decision: March 5, 2023 Editor Andrew Ellul. Authors have furnished Internet Appendix, available Oxford University Press Web site next link final published paper online.