The determinants of voluntary investment decisions

This paper analyses investments by firms into areas of corporate social responsibility, focussing on the decision by firms whether or not to invest in compliance with voluntary environmental standards. Theoretical predictions of the compliance decision are tested using discrete time survival analysis on a large dataset of UK manufacturing firms. The rate of voluntary compliance is found to have increased since the introduction of the International Standards Organization (ISO) scheme. Further, voluntary compliance is found to be negatively associated with rates of return and industry share, and positively associated with capital intensity and industry export intensity. In contrast to theoretical predictions on corporate social responsibility, there is no evidence that investment in intangible assets, either at the firm or the industry level, is positively associated with the compliance decision.