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Does social responsibility begin at home? The relation between firms’ pension policies and corporate social responsibility (CSR) activities


Pension freezes are highly visible corporate actions with the potential to hurt the firms’ reputation as “responsible” employers. We document that firms sponsoring defined-benefit pensions step up CSR engagement following announcements of defined-benefit pension freezes. Freeze firms also increase their usage of CSR-related keywords in public disclosures following the freeze. We find a stronger CSR response to more severe freezes, to more controversial cash-balance conversions, and in larger sponsors. This is consistent with CSR increases being motivated by the need to repair one’s reputation. We also find that CSR increases following an accounting rule change that makes pension deficits more visible. Collectively, our findings highlight an important driver of CSR: the need to restore or manage reputation, especially in the face of corporate actions that can hurt stakeholders.

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  1. In Appendix 1, we list other examples of pension sponsors stepping up CSR activities following pension freezes.

  2. While the CSR response is aimed at local communities, the intended audience for reputation-repair could be much broader than the stakeholder groups that specifically benefit from the CSR responses. All stakeholders who care about firms’ treatment of workers could notice and respond with sanctions—socially responsible investors could reduce their holdings, customers could boycott the firm’s products, and local communities could protest. Resulting media attention could bring scrutiny from politicians and regulators. This is in addition to employees, who are directly hurt by benefit cuts. Therefore sponsoring firms have strong incentives to take actions so as to repair their reputation as good corporate citizens with all these stakeholders. Theory does not specify a particular stakeholder with whom the firm will try to repair reputation, although certain stakeholders could be more important to certain firms.

  3. Statement of Financial Accounting Standards (SFAS) No: 158 Employers’ Accounting for Defined-Benefit Pension and Other Postretirement Plans.

  4. Godfrey et al. (2009), Wans (2017), and Barnett et al. (2018) document insurance-like consequences from CSR in archival empirical settings. Bolton and Mattila (2015), Joireman et al. (2015), and Eisingerich et al. (2011) demonstrate insurance-like effects of CSR in an experimental setting.

  5. They document a sharp increase post restatement in what they label reputation-repair actions, targeting customers (e.g., improved warranty programs), employees (e.g., investing in winning “Best Employer” awards), and the community (e.g., charitable contributions and involvement with nonprofit organizations).

  6. Notwithstanding this trend, defined-benefit pension plans remain economically important in the United States. These plans, across corporate and governmental sectors, controlled assets worth $8 trillion in 2013 (Towers Watson 2014). In 2017, the aggregate dollar amount of pension obligations (assets) for all U.S. defined-benefit sponsors on Compustat was $2.7 trillion ($2.3 trillion). From employees’ perspective, 37 million private sector employees and retirees rely on one of the 25,000 defined-benefit plans sponsored by the Pension Benefit Guaranty Corporation (PBGC) for retirement income. PBGC Annual Report 2018, available at:

  7. In cash-balance plans, the employee’s account is credited each year with a pay credit (e.g., 5% of annual compensation) and an interest credit (which could be fixed or floating). Like traditional defined-benefit plans, they are protected by the Pension Benefit Guaranty Corporation, and the employer bears investment risks. Unlike traditional defined-benefit plans, which define the benefit as a series of monthly payments payable for life starting at retirement, cash-balance plans define the benefit as a stated account balance; e.g., on retirement, the participant will have an account balance worth $100,000, which she could choose to take as a lump-sum or convert to an annuity.

  8. The literature examining why sponsors freeze defined-benefit plans has found some support for both supply-side and demand-side motivations for pension freezes. Among the supply-side motivations, sponsors are unwilling to continue defined-benefit plans because they impose too heavy or too volatile of a cash-flow burden for contributions (Munnell and Soto 2007).

  9. In our sample there are 313 individual firms that freeze pension plans. Of these, 38 firms engage in multiple freezes. Dropping the second freeze of these firms helps more clearly isolate the impact of the first freeze, by ensuring that the post-freeze period of the first freeze is not tainted by pre-freeze period of the later freeze. Our results are also robust to dropping altogether the firms with multiple freezes.

  10. KLD’s manual, available at, indicates that KLD analysts gather CSR information from a variety of public sources. MSCI claims that the ratings are used by over 1000 institutional investors. Recent examples of studies using KLD ratings include Lins et al. (2017) and Davidson et al. (2019).

  11. We list examples of CSR-related keywords from the dictionary in Table 9 of the online appendix.

  12. Available from

  13. We exclude keywords from the employee relations category to be consistent with our focus on non-employee categories from KLD ratings.

  14. Table 10 of the online appendix tabulates descriptive statistics about the persistence of CSR engagement over this longer window. Given the increasing trend in CSR engagement over time, these patterns are only suggestive.

  15. The strengths indicators under Community include “innovative giving” (charitable giving programs supporting affordable housing, healthcare access, public education, hunger relief, and other programs targeted at disadvantaged communities) and “community engagement” (programs involving local communities in areas where the firm has major operations).

  16. The mapping of our sample to CSRWire is low for two reasons. Our sample starts in 1995, whereas CSRWire coverage starts from 2000. And our sample has many small firms, whereas CSRWire focuses on larger ones.

  17. To keep data collection efforts manageable, we focus our manual research of CSRNewswire and Global Reporting Initiative only on the treatment firms. Since we do not have relevant data for the control group, we cannot rule out the possibility that the patterns in Table 3, Panels B–C, are affected by a trend of issuing more press releases/CSR reports over time. CSR reports have become more prevalent over time: by 2018, 86% of S&P 500 firms issued CSR reports (, whereas only 20% did so in 2011. Therefore we caution that the patterns in Panels B–C are only suggestive.

  18. A better way to identify employers trying to “do the right thing” by their employees would be to identify those that offer employees a choice (to move to the new benefit structure or not). Unfortunately, due to the voluntary nature of such disclosure, only four employers explicitly mentioned a choice, too few for meaningful results.

  19. See Bulkeley and Schultz (2003), Johnston (2004), and U.S. Senate Hearing 106–849 (2000).

  20. Perceptions of unfairness were also heightened by firms’ attempts to promote cash-balance conversions to their employees. While defined-benefit freezes are often presented as a painful but necessary step to remain competitive, cash-balance conversions were presented to workers as a beneficial change. Janet Krueger, lead spokesperson for the IBM Employee Benefits Action Coalition, said in congressional testimony: “IBM told us they did the conversion to retain older workers.” She also said IBM claimed “employees would receive frequent statements listing their earned cash balance” and that “a cash balance plan is much easier to understand.” Krueger argued that none of these claims turned out to be true and that IBM removed a pension calculator from its internal website, inhibiting employees’ ability to grasp exactly how their benefits were changing. Pension consultants even touted as a “handy” feature of these plans that it was “difficult for employees to compare prior pension benefit formulas to the cash-balance approach”(Crenshaw 1999). So when employees eventually realized that they had lost substantial benefits, widespread anger resulted (Madland 2007).

  21. The net effect to the firm from freezing defined-benefit pensions is not unambiguously clear. On one hand, pension freezes yield cost savings for firms (e.g., Rauh et al. 2013), which benefit stockholders. On the other hand, offsetting costs arise from loss of employee morale, difficulty in attracting and retaining employees, and reputational harm, which are harder to quantify. Unsurprisingly, empirical work with recent samples produces mixed results. Milevsky and Song (2010) find positive announcement-period returns, while McFarland et al. (2009) find negative or insignificant announcement-period returns. It is not always easy to identify the announcement date (Cocco 2014); for this reason, we do not examine announcement-period returns but rather returns over the fiscal year of announcement.

  22. Theory does not specify a particular stakeholder with whom the firm will try to repair its reputation; however, certain stakeholders could be more important for certain firms. While developing these predictions is beyond the scope of our paper, we test whether the CSR response is stronger for consumer-facing firms, using proxies developed by Lev et al. (2010) and Servaes and Tamayo (2013). We find no meaningful results.

  23. Prior to SFAS 158, the funding status (projected benefit obligation or PBO minus fair value of plan assets) was only disclosed in footnotes to the financial statements but not recognized on the balance sheet. On balance sheet, the funding status based on a smaller estimate of the obligation (the accumulated benefit obligation, ABO), was recognized but only if the plan was underfunded on an ABO basis. ABO-basis underfunding (i.e., ABO minus fair value of plan assets) was recognized directly through the statement of changes to stockholders’ equity, as a dirty-surplus item.

  24. A body of literature supports the notion that recognition brings more visibility than footnote disclosure alone (e.g., Bernard and Schipper 1994; Aboody 1996). Yu (2013) provides evidence consistent with increased investor awareness of pension liabilities post SFAS 158.

  25. Axenrod and Kisser (2020) demonstrate no significant reduction in affected sponsors’ leverage following SFAS 158; they also find no significant increase in interest costs for these firms, consistent with early evidence from Shaw (2008). Donovan et al. (2019) document no significant increase in default risk for underfunded sponsors post-SFAS 158. Collectively, these studies suggest that SFAS 158 did not discernibly reduce sponsors’ borrowing capacity.

  26. Both funding ratio and annual contributions have pros and cons. The funding ratio is influenced by many disparate factors: not only by cash contributions and asset returns (in turn influenced by asset allocation, which varies widely) but also by changes to benefit structure (e.g., benefit cuts can reduce the obligation) and actuarial assumptions. By the same token, though, the funding ratio provides a comprehensive measure of overall how secure the benefits promised are. For example, to improve benefit security, one firm might boost contributions while another reduces future benefit accruals. Both actions, while very different in their implications for employees, will improve the funding ratio.

  27. One confounding factor could be that pension freezes, which often reduce expected benefit payouts and hence the pension liability, could end up improving funding status. This, combined with our baseline findings that freeze firms increase CSR, could introduce noise in estimating the effect of ΔFUNDING RATIO < 0.

  28. We obtain similar results when excluding firm FE and removing observations within two years around pension freezes and SFAS 158. In the latter case, we find a more significant coefficient on ΔFUNDING RATIO < 0, consistent with the intuition that the inclusion of freeze observations reduces testing power. We also control for lagged funding ratio in the contributions model (and vice versa), to account for the mean-reversion, due to pension funding rules, with similar inferences. In additional tests, we find that the association of funding status with CSR is driven by underfunded pensions, indicating nonlinearities in the implications of pension funding.

  29. Two tests in the paper provide evidence supporting the reputation-repair interpretation over the “freezes free up resources” interpretation. First, the strong increase in CSR following cash-balance conversions. These conversions do not clearly free up additional resources, relative to other kinds of freezes. However, they were especially controversial. Second, the CSR increase following SFAS 158, which potentially increased pension visibility but did not necessarily free up financial resources.

  30. We tabulate all results discussed in this section in Tables 10, 11 and 12 of the online appendix.

  31. Kotsantonis and Serafeim (2019) discuss many issues with CSR-related data, such as inconsistencies in the way companies report CSR metrics, distortions created by different peer group choices, varying methods for imputing missing metrics, and disagreements among ratings. In addition to the robustness tests discussed above, (i) we document that CSR disclosures, measured as Ln(TOTAL CSR WORDS), increase significantly following pension freezes—to the extent to which CSR performance and CSR disclosure are correlated, finding similar results with our word count-based measure (that is constructed very differently from KLD ratings) serves as a validity check that our results with KLD ratings are not artifactual to KLD’s data scoring procedures; (ii) our findings are robust to using an alternative data source to measure CSR performance, Asset4.

  32. We document results discussed in this section in Tables 12 and 13 of the online appendix.


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We are grateful to Albert Tsang and participants at Wake Forest University’s Conference on Corporate Social Responsibility for many useful comments. We thank Keyi Zhao for excellent research assistance. All errors are ours alone.

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Appendix 1: Anecdotal evidence of firms increasing CSR activities after freezing defined-benefit pensions

In this appendix, we summarize anecdotal evidence of firms stepping up CSR initiatives significantly following pension freezes. We first search annual reports, CSR reports, and press releases and then supplement with information from Factiva for CSR activities around pension freezes. Next, we read these documents and identify CSR activities. We then compare them with activities from the previous years to find new initiatives or efforts to step up commitment to CSR or related disclosures compared with previous years. We only include ongoing/continued investment in employees and communities if there is a significant increase in the dollar amount of contribution or the scope of a program.

New CSR initiatives of Procter & Gamble Co. after pension freeze in 2008
COMMUNITY • Partnered with Feeding America in an effort to raise four million meals during the holiday season
• Provided $2 million worth of support for the relief and rebuilding efforts after the Haiti earthquake
• Contributed $150,000 to Hispanic Scholarship Fund to Support Hispanics pursuing careers in Sciences, Technology, Engineering and Mathematics.
ENVIRONMENT • Unveiled a long-term environmental sustainability vision, which included a series of 10-year sustainability goals to enable the company to track progress against its long-term sustainability vision.
New CSR initiatives of Pepsi Co after pension freeze in 2011
COMMUNITY • Added another 35,000 students in its expanded program, Diploma Now, which assists schools in their effort to help students graduate and prepare for college or a career.
• Partnered with UNICEF and ESPN Brazil to create the Caravando do Esporte (Sports Caravan) for children and adolescence for children and adolescents in Brazil, which promotes sports as an essential element for development and social inclusion and as a way to improve quality of life.
• Increased the total amount of annual cash contribution to the Pepsi Foundation significantly. Based on disclosure from its annual reports and CSR reports, the contribution in 2009 and 2008 is $76.5 million and $78.6 respectively. The amount of contribution in 2010 and 2011 is $91.9 million and $99 million, an increase of over 20% over the previous two years.
New CSR initiatives of Herman Miller after pension freeze in 2011
COMMUNITY • Added the Alzheimer’s Association of West Michigan as a recipient of contributions.
• Supported All City Canvas in a project to paint murals on The Hub building in a gritty neighborhood of Mexico City and facilitated grassroots workshops for artists and local community.
• Reorganized the contributions into five areas: design, arts, and culture; education; health; essential human needs; and the environment in a program called Herman Miller Cares.
EMPLOYEE • Set up five employee-led boards that research organizations needing help and contributions.
ENVIRONMENT • Started a new sustainability strategy called Earthright to renew its commitment to the environment and set up new goals. One of the goals is to reduce water usage by 50% by fiscal year 2023.
New CSR initiatives of Kimberly-Clark after pension freeze in 2010
COMMUNITY • Developed new programs including Huggies Every Little Bottom, which encouraged consumers and diaper banks to donate and distribute 22.5 million diapers to needy families in the United States and Canada
• Launched the Green Patrol, a program to bring employees and other volunteers to communities throughout the United States to help plant trees, aid in cleanup and recycling projects and other environmental efforts.
• Launched the Healthy Workplace Project, a comprehensive approach to hand hygiene aimed at reducing workplace absenteeism and the productivity and business losses that occur when workers are sidelined by colds, the flu, and other contagious ailments
• Initiated awards to Family Plus Inspirational Mom and Dad
• Recognized and gave awards to childcare workers for the first time.
• Initiated its first-ever MomInspired grants to 12 entrepreneurial moms
EMPLOYEE • Started a new (K-C International) KCI Role Model Award to employees who “put consumers and K-C first in everything they do” and “actively seek out and apply diversity of thought and ideas.”
ENVIRONMENT • Reduced freshwater use in mills in 2010. An additional 14 mills achieved the certification of ISO 140001, bringing the total number of ISO 14001-certified mills globally to 43.
• Launched the Reduce Today, Respect Tomorrow program, a sustainability initiative to reduce environmental impact at every stage of a product’s lifecycle.
• Developed new product Scott Naturals Tube-Free bath tissue, to reduce paper waste in landfills
• Developed new product Scott Naturals Smart Flush bag, reducing water use associated with toilet flushing, saving one litre per flush.
• Engaged with more stakeholders including United Nations Global Compact, World Wildlife Fund, Greenpeace and others to gain fresh perspectives to identify more ways to create a better future

Appendix 2: Identifying pension freezes

We explain the process of identifying pension freezes in this appendix. First, this information is not readily available in machine-readable form on any database, which necessitates hand-collection from a variety of sources. Second, even on pension footnotes in the 10-K, the disclosures are provided in narrative format with the details varying from firm to firm, making any keyword search on standard terms incomplete. To overcome these difficulties and construct a reasonably complete sample of pension freezes, we combine hand-collection with an analytical procedure designed to pinpoint firm-years highly likely to have had a pension freeze.

Most pension freezes involve a reduction in the rate at which the firm accrues pension service costs, that, the accrual of pension benefits as a result of one additional year’s service from employees. Our analytical procedure aims to identify firms with a sudden reduction in the ratio of service cost to lagged projected benefit obligation (PBO). We use three indicators to identify suspected freeze firm-years. First, we flag firms for which the service cost goes down from a nonzero value to zero. (This identifies hard freezes that apply to the entire employee base, which are relatively uncommon, as some older employees are typically grandfathered into older benefit terms. Second, we flag firm-years for which the ratio of service cost to PBO declines to more than two-thirds of its prior-year value. Third, we flag firms with a drop of at least 1% in value when the prior-year ratio is more than 3%. We refine these cutoff values on a training dataset of 100 freezes that we compile using keyword searches on the term “freeze” and its variants; these rules flag virtually all these freezes.

We then manually examine all 10-Ks flagged by these indicators as suspected of having a freeze, and code freeze characteristics. We examine a base sample of all firm-years with available KLD data. Often, the disclosures on 10-Ks are sparse, and so we rely on internet searches for newspaper articles or corporate announcements relating to the freeze. We supplement these firm-years by (i) manually examining all other 10-Ks returning positive values for keyword searches on “freeze,” “discontinue,” “terminate,” “renegotiate” and their variants combined with “pension,” “benefit,” “postretirement,” or “postemployment”; (ii) publicly available lists of firms freezing their pension plans from, for example, the Pension Rights Center (; and (iii) a list of plan-years hard-freezing their pension plans from Form 5500 s, the regulatory filing all U.S. plans must make with the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation (PBGC). Of all the events identified, we only retain those that relate to the freeze of a defined-benefit or cash-balance plan that covers a broad base of corporate employees. This means excluding (i) freezes of supplemental executive retirement plans (SERPs) or “top-hat” plans that are restricted only to the highest-earning executives of the firm; (ii) plan freezes connected to a “standard termination,“which can typically only be done if the plan is fully funded and the sponsor can demonstrate to the PBGC that it has sufficient funds to pay all beneficiaries; (iii) freezes for which neither announcement date nor effective date is available.

We then merge the freeze incidents to our Compustat-based firm-year level data based on the announcement date, as the need for reputation repair arises in the wake of the public announcement, even if the benefit cuts only occur subsequently. If the announcement date is not available, we merge by the effective date of the freeze.

We classify the intensity of the freeze based on narrative disclosure in 10-Ks, 8-Ks, press releases, news articles, and pension watchdog websites. There is varying detail available on exact plan changes or the nature of the replacement. Some firms provide specific disclosures on the replacement offered (e.g., while others provide only broad strokes (e.g., “we plan to make enhancements to the DC program”). Our indicators on the types of pension freezes based on these disclosures therefore are noisy.

Appendix 3: Variable definitions

This table defines the variables used. Names in the block capitals are Compustat variable names.

Variable Definition
CSR engagement and disclosure
  NET CSR STRENGTHS Net score of CSR ratings, measured as total strengths minus total concerns in five social rating categories of KLD ratings data: environment, community, diversity, human rights, and product.
  Ln(TOTAL CSR WORDS) The natural log of the frequency of CSR-related keywords disclosed on 10-Ks, following the dictionary developed by Pencle and Malaescu (2016) together with the Computer-aided text analysis tool designed by Aaron F. McKenny and Jeremy C. Short.
  RESIDUAL CSR TALK The residual obtained by regressing Ln(TOTAL CSR WORDS) on NET CSR STRENGTHS and other determinants of CSR engagement, Appendix 4.
Pension freeze characteristics
  FREEZE An indicator variable that equals one for a firm if it froze its pension plan during the sample period and zero otherwise.
  POST An indicator variable that equals to one for the year of pension freeze and two years following the pension freeze and zero otherwise.
  MAJOR FREEZE A dummy variable that equals one if the sponsor of a defined-benefit plan froze benefits for “substantially all employees” or “for substantially for all plans,” or “for our principal defined benefit plans” or “for a majority of employees” or if the footnote or announcement contains similar language and zero otherwise.
  HARD FREEZE A dummy variable that equals one if all ongoing defined-benefit benefit accruals end and employees no longer accrue additional benefits for additional years of service or future salary increases and zero otherwise.
  CASH BALANCE CONVERSIONS A dummy variable that equals one if a traditional defined-benefit plan is converted to a cash-balance plan, which operates as a sort of hybrid of defined-benefit and defined-contribution plans and zero otherwise.
  ENHANCED DC A dummy variable that equals one if a defined-benefit plan is frozen and the sponsor enhances the defined-contribution plan and zero otherwise.
Other pension characteristics
  PLAN ASSETS The fair value of pension assets (PPLAO) at the end of the fiscal year.
  PLAN LIABILITIES Projected benefit obligations (PBPRO) at the end of the fiscal year.
  BENEFITS Annual service cost divided by projected benefit obligation at the beginning of the year.
  ∆BENEFITS < 0 A dummy variable that equals one if the change in BENEFITS between year t and t-1 is negative and zero otherwise.
  FUNDING RATIO Fair value of pension assets dividend by Pension liabilities, PPLAO/ PBPRO.
  ∆FUNDING RATIO < 0 A dummy variable that equals one if the change in FUNDING RATIO between year t and t-1 is negative and zero otherwise.
  CONTRIBUTION The amount of cash contribution a firm made in the year divided by projected benefit obligation at the beginning of the year.
  ∆CONTRIBUTION < 0 A dummy variable that equals one if the change in CONTRIBUTION between year t and t-1 is negative and zero otherwise.
  NEGADJ158 An indicator variable that equals one if the application of SFAS 158 led to a negative adjustment to stockholders’ equity and zero otherwise. We calculate the application effect of SFAS 158, following Fried (2010).
  POST158 An indicator variable that equals one for two years on and after the application of SFAS 158 and zero otherwise.
Firm characteristics
  SIZE Total assets (AT) of the firm at the end of the fiscal year.
  MB Book value of equity (CEQ) divided by market value of equity defined as stock price at the end of fiscal year (PRCC_F) times shares outstanding (CSHO).
  LEVERAGE Long-term debt (DLT) plus debt in current liabilities (DLCC), divided by beginning total assets (AT).
  ROA Income before extraordinary items (IB) less pension and retirement expense (XPR) divided by beginning total assets (AT).
  KZ Kaplan and Zingales (1997) index measured as follows:
−1.002 * cash flow from operations/lagged assets- 39.368 * cash dividends/lagged assets −1.315 * cash balances/lagged assets +3.139 * book leverage ratio + 0.283 * Tobin’s Q. A firm with a larger KZ index relies more on external funding and is considered to have more capital constraints.
  DIVIDEND Cash dividends (DVC) divided by beginning total assets (AT).
  FREE CASH FLOW Cash flows from operations (OANCF) before pension contributions (PBEC) less capital expenditure (CAPX) divided by beginning total assets (AT).
  CASH FLOW VOLATILITY Standard deviation of FREE CASH FLOW for the current and previous four years.
  ADVERTISING Advertisement expenditure (XAD) divided by beginning total assets (AT)
  R&D R&D expenditure (XRD) divided by beginning total assets (AT)
  CONTROVERSIAL An indicator variable that equals one if the firm belongs to any of the following industries—alcohol, gambling, military contracting, nuclear power, and tobacco and zero otherwise.
  NET GOV STRENGTHS Net score of CSR ratings, measured as total strengths minus total concerns in the governance category in KLD ratings data.
  LITIGATION RISK Probability of getting sued in a class-action lawsuit, calculated using Kim and Skinner (2012).
  MARGINAL TAX RATE A firm’s marginal tax rate obtained from Blouin, Core, Guay database.
  LN(PLAN SIZE) Natural log of the fair value of pension assets (FVPA) at the end of the year.
  ACTUAL RETURN Actual return on pension plan assets (AR)/fair value of pension assets (FVPA) at the beginning of the year.
  DISCOUNT RATE Discount rate actuarial assumption used to estimate the pension obligation on the balance sheet at the fiscal year-end (PBARR).
  RETt Buy-and-hold market-adjusted returns accumulated over the one-year window beginning nine months before the fiscal year-end t and ending three months after the fiscal year-end t.

Appendix 4. The relation between CSR disclosure and CSR engagement

This table examines the relation between firms’ CSR-related disclosures in the 10-K filing and CSR engagement as measured by its KLD rating. In Column (1), the dependent variable Ln(TOTAL CSR WORDS) is the natural logarithm of the frequency of CSR-related keywords disclosed on 10-Ks, following the dictionary developed by Pencle and Malaescu (2016) together with the computer-aided text analysis tool designed by Aaron F. McKenny and Jeremy C. Short. RESIDUAL CSR TALK is the residual obtained from estimating this model. In Column (5), the dependent variable is one-year-ahead NET CSR STRENGTHS, which is the total number of strengths (TOTAL CSR STRENGTHS) minus the total number of concerns (TOTAL CSR CONCERNS) in five categories of KLD ratings: community, environment, diversity, human rights, and product. All other variables are as defined in Appendix 3 of the manuscript. ***, **, and * denote significance at the 1%, 5%, and 10% levels respectively. Standard errors are clustered at the firm and year level.

  (1) (2) (3) (4) (5)
NET CSR STRENGTHSt 0.009** 0.072*** −0.043*** −0.035  
(2.475) (5.894) (−3.099) (−0.627)  
RESIDUAL CSR TALKt      0.379***
Ln(SIZE) 0.103*** 0.087*** 0.099*** 0.141*** 0.595***
(10.458) (9.753) (6.925) (11.800) (4.129)
MB −0.002 0.003 −0.003 −0.004 0.028
(−0.305) (0.474) (−0.411) (−0.468) (0.575)
LEVERAGE −0.485*** −0.584*** −0.217 −0.642*** −0.783
(−3.182) (−3.834) (−1.040) (−3.912) (−0.719)
ROA −0.444*** −0.507*** −0.422** −0.513*** 1.113
(−3.526) (−4.642) (−2.341) (−3.915) (0.936)
KZ 0.099*** 0.051 0.068 0.147*** 0.938***
(2.982) (1.536) (1.463) (4.278) (4.553)
DIVIDEND 3.451** 2.673* 1.601 5.364*** 26.379**
(2.392) (1.784) (0.823) (3.678) (2.817)
FREE CASH FLOW −0.079 −0.032 −0.162 −0.054 −0.925
(−0.407) (−0.187) (−0.563) (−0.207) (−0.835)
CASH FLOW VOLATILITY 0.910*** 0.431 1.435*** 0.920** 0.179
(2.914) (1.596) (3.541) (2.317) (0.078)
ADVERTISING 0.618 0.644 0.490 1.093 20.399***
(0.914) (1.078) (0.674) (1.362) (3.786)
R&D −0.446 −0.718 0.322 −0.278 23.135***
(−0.694) (−1.129) (0.500) (−0.386) (6.230)
CONTROVERSIAL 0.131*** 0.112*** 0.108** 0.128** −1.361***
(3.896) (3.609) (2.845) (2.767) (−4.449)
NET GOV STRENGTH −0.028 −0.025 0.006 −0.041* 0.447**
(−1.512) (−1.321) (0.289) (−1.902) (2.726)
LITIGATION RISK −0.792 −1.050* −0.268 −1.045 2.939
(−1.431) (−2.018) (−0.391) (−1.623) (0.716)
Industry FE Yes Yes Yes Yes Yes
Year FE Yes Yes Yes Yes Yes
Observations 2152 2152 2140 2152 1840
Adjusted R2 0.226 0.199 0.277 0.209 0.308

Appendix 5: Additional analysis

Table 9 Examples of CSR-related keywords in the Pencle and Malaescu (2016) dictionary
Table 10 The persistence of CSR activities after the pension freeze
Table 11 Changes in CSR activities around the pension freeze—ruling out additional financial resources as an explanation
Table 12 CSR ratings around pension freezes – alternate measures of CSR rating
Table 13 CSR ratings around pension freezes—alternate model specifications

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Anantharaman, D., Gao, F. & Manchiraju, H. Does social responsibility begin at home? The relation between firms’ pension policies and corporate social responsibility (CSR) activities. Rev Account Stud 27, 76–121 (2022).

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  • Pension freezes
  • Pension funding
  • Corporate social responsibility
  • Corporate reputation; risk-management