Does Corporate Social Responsibility Affect Stock Returns?
DOI:
https://doi.org/10.12928/ijiefb.v5i2.5951Keywords:
Corporate social responsibilities; Product market competition; Stock returnsAbstract
Introduction: This paper finds that U.S. firms with higher corporate social responsibility (CSR) compliance levels have higher stock returns from 2006 to 2014. This result is robust after controlling for size, book to market ratio, momentum, etc
Purpose: There appears to be a positive relationship between corporate social responsibility compliance level and product market competition level.
Methodology: Obtain CSR data from Global Reporting Initiative. Monthly stock return files and annual firm fundamentals are downloaded from CRSP and Compustat database. In the GRI dataset, we quantify firm’s compliance level as numeric values from 0 to 5, with 5 being the highest compliance level. The compliance level score mapping is displayed in Table 1 in the appendix.
Findings: This paper finds that engagement in CSR activities have a positive impact on stock returns. This effect is robust after controlling for firm characteristics such as size, book to market equity ratio.
References
Reference
Fama, E. F., & Macbeth, J. D., 1973. Risk, return, and equilibrium: empirical tests. Journal of Political Economy, 81(3), 607–636.
Fisman, R., G. Heal, V.B. Nair, 2008. A model of corporate philanthropy. Working paper, Columbia University.
Flammer, C., 2013. Corporate social responsibility and shareholder reaction: The environmental awareness of investors, Academy of Management Journal 56, 758–781.
Freeman, E.R., 1984. Strategic management: a stakeholder approach, New York, NY, Cambridge University Press.
Friedman, M., 1970. The social responsibility of business is to increase its profits. The New York Times Magazine, p.122.
Hsu, Feng-Jui, and I-Chien Liu, 2017. Quantitative easing and default probability of corporate social responsibility in US, Applied Economics Letters 24:10, 681-685.
Lins, K.V., H. Servaes, and A. Tamayo, 2017. Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis, Journal of Finance 72, 1785-1824.
Withisuphakorn, Pradit, and Pornsit Jiraporn, 2016. The effect of firm maturity on corporate social responsibility (CSR): do older firms invest more in CSR? Applied Economics Letters 23:4, 298-301.
Downloads
Published
Issue
Section
License
Copyright (c) 2022 Universitas Ahmad Dahlan
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
License and Copyright Agreement
In submitting the manuscript to the journal, the authors certify that:
- They are authorized by their co-authors to enter into these arrangements.
- The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal. Please also carefully read Ihtifaz, Journal of Islamic Economics, Finance, and Banking Posting Your Article Policy at http://journal2.uad.ac.id/index.php/ijiefb/about/submissions#onlineSubmissions
- That it is not under consideration for publication elsewhere,
- That its publication has been approved by all the author(s) and by the responsible authorities “tacitly or explicitly“ of the institutes where the work has been carried out.
- They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
- They agree to the following license and copyright agreement.
Copyright
Authors who publish with Ihtifaz, Journal of Islamic Economics, Finance, and Banking agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC BY-SA 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
_1.png){kind=logo}
