- McDonald, Elizabeth [Browse]
- Senior thesis
- 93 pages
- Hong, Harrison [Browse]
- Princeton University. Department of Economics [Browse]
- Class year
- Summary note
- The firm is a microcosm of society: it brings members into a select
community and therefore has an intrinsic influence on the community’s culture.
Companies also use their influence by lobbying governments to enact social laws.
However, the overall impact a firm has on the social norms and values of society
reflected in governmental legislation is unclear. This paper uses MSCI KLD
Environmental, Social and Governance (ESG) performance indicators to analyze
the relationship between expanded corporate social responsibility practices and
the legalization of same-sex marriage on the state level. This study finds that
states with higher average ESG scores were more likely to legalize same-sex
marriage, and did so earlier than comparable states with lower ESG scores.
Furthermore, the models show that higher ESG scores tend to precede changes
in legislation. While it cannot be conclusively proven, the directionality and
significance of the results in this study support the theory that changes in
corporate behavior may in fact be influential on legislation.