Does community environment matter to corporate social responsibility?

- Firms operating in counties with more seniors show a higher CSR.
- Firms operating in counties with more religious adherents show a higher CSR.
- For firms with less financial constraints, percentage of seniors and religious adherents in the operating county are positively correlated with CSR.

How does the preference of local stakeholders shape firm's corporate social responsibility (CSR)? Using a twenty-year U.S. sample, this paper examines the effects of the community demographic and cultural environment on CSR. We find that firms located in counties with more senior residents and/or higher levels of religiosity display higher degree of corporate social responsibility. In addition, we find the positive effects of local seniors and religiosity are stronger for less financial constrained firms. The result is robust after controlling for firm fixed effects, operating state trends and incorporation state trends. Taken together, our evidence supports a stakeholder theory of corporate social responsibility.