Mackey, Alison, Tyson Mackey, and Jay Barney. "Corporate Social Responsibility and Firm Performance: Investor Preferences and Corporate Strategies." Working Paper, 2004.

This theoretical paper proposes a new framework for reviewing management decisions to engage (or not engage) in socially responsible behavior. Although there has been much debate about whether corporate social responsibility increases or decreases firm value, the authors sensibly note that "sometimes socially responsible activities increase firm value, sometimes they reduce firm value, and sometimes they have no impact on firm value at all."

The authors note that most studies of social responsibility equate changes in firm value with changes in the present value of firms' future earnings streams, but argue that this assumption is simplistic. They point out that some forms of corporate social behavior might increase firm value even if they negatively impact cash flows. This could happen if the behavior makes the firm more attractive to capital markets, reducing its cost of capital and creating an increase in market value that offsets the cost of the behavior.

See Angel and Rivoli (1997) for a related discussion using a CAPM framework.