Do Announcements About Corporate Social Responsibility Create or Destroy Shareholder Wealth? Evidence from the UK
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Ezio Di Nucci
Jack Alan Reynolds
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Journal of Business Ethics 106 (3):253-266 (2012)
This paper investigates the stock market reaction to the announcement that a firm has been included in the UK FTSE4Good index of socially responsible firms. We use the announcement of firm inclusion in the index to estimate the stock market reaction to a firm being classified as socially responsible. This is an important test of whether investors view the undertaking of socially responsible activities by firms as a value increasing or value decreasing initiative by management. We do not find strong evidence in favour of a positive market reaction. However, there is a large cross-sectional variation in the market reaction to this announcement. Investors appear to be reacting to this event and there are a number of firm characteristics that are well-established proxies for CSR that can explain the market reaction.
|Keywords||CSR Stakeholders Investors Firm value|
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References found in this work BETA
Michael C. Jensen (2002). Value Maximization, Stakeholder Theory, and the Corporate Objective Function. Business Ethics Quarterly 12 (2):235-256.
Russell Sparkes & Christopher J. Cowton (2004). The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility. [REVIEW] Journal of Business Ethics 52 (1):45-57.
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Citations of this work BETA
Mahfuja Malik (2015). Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature. Journal of Business Ethics 127 (2):419-438.
Andreas G. F. Hoepner, Thereza Raquel Sales de Aguiar & Ravi Majithia (2014). The Level of Compliance with the International Code of Marketing of Breast-Milk Substitutes: Does It Matter to Stock Markets? Journal of Business Ethics 119 (3):329-348.
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