CSR and Shareholder Value in the Restaurant Industry: Moderating Effects of Advertising Spending Contingent on CSR Types

Corporate social responsibility (CSR) and marketing initiatives are the key strategic tools necessary to improve restaurant firms’ competitive advantages and financial performances. Previous literature has showed that CSR is positively associated with stock returns and negatively related to their volatility, thus increasing shareholder value in the restaurant industry. However, insights into whether advertising spending―a proxy for spending on marketing activities―moderates the CSR effects are lacking. If so, what CSR types strongly drive such moderation effects? Drawing on stakeholder theory, this study decomposes CSR into two types: CSR directed toward primary versus non-primary stakeholders. Given that restaurant firms' advertising spending is typically short-term and sales-oriented, which contrasts with the long-term objectives of CSR, we hypothesize that increased advertising spending reduces the positive effect of CSR (particularly CSR for non-primary stakeholders) on shareholder value. Our findings are consistent with these hypotheses, providing several important implications for CSR researchers and restaurant practitioners.