Abstract
This study investigates three possible explanations of the link between Corporate Social Responsibility (CSR) expenditures and future financial performance for family firms: (i) CSR is an investment leading to better future financial performance, (ii) it is a form of firms' charity, or (iii) it is undertaken when anticipating stronger future financial performance. It also examines whether the institutional environments have effects on this association. We show that family firms in coordinated market economies are characterised by stronger stakeholder relationship and CSR expenditures are undertaken in the current period to legitimate the business operations, as CSR will be financially rewarded in the future. However, firms in liberal market economies are motived by shareholder view to protect investors' interests and avoid uncertainty and risks, and CSR expenditures are undertaken by linking them to anticipated future corporate performance, hereby corporate accountability reporting can assist outsiders to infer insiders' private information about future financial prospects.