Corporate sustainability and the market pricing of accounting numbers

Hyunjung Choi, Doocheol Moon, Andres Guiral, Byungchul Choi

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This study investigates the association between CSR and the market pricing of accounting income numbers' persistence. More specifically, we examine whether the market evaluation of earnings persistence relies on the firm's CSR activities. We find that the market overestimates the persistence of earnings, leading the market to overprice the earnings for CSR companies in Korean setting. We also find that market overprices components of earnings, which are accruals and cash flow from operations, for CSR companies. However, results show that the level of CSR activities does not affect investors' rational pricing of earnings. This study suggests that market participants prefer companies engaging in CSR activities because they are more likely to provide better financial performance and earnings quality. This preference leads investors to overestimate the persistence of earnings and its components for CSR companies.

Original languageEnglish
Pages (from-to)1117-1126
Number of pages10
JournalCorporate Social Responsibility and Environmental Management
Volume28
Issue number3
DOIs
Publication statusPublished - 2021 May 1

Bibliographical note

Publisher Copyright:
© 2021 The Authors. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons, Ltd.

All Science Journal Classification (ASJC) codes

  • Development
  • Strategy and Management
  • Management, Monitoring, Policy and Law

Fingerprint Dive into the research topics of 'Corporate sustainability and the market pricing of accounting numbers'. Together they form a unique fingerprint.

Cite this