Do Investors Value a Firm's Commitment to Social Activities?

Waymond Rodgers, Hiu Lam Choy, Andrés Guiral

Research output: Contribution to journalArticle

37 Citations (Scopus)

Abstract

Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm's innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin's Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm's social responsibility commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm's financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity.

Original languageEnglish
Pages (from-to)607-623
Number of pages17
JournalJournal of Business Ethics
Volume114
Issue number4
DOIs
Publication statusPublished - 2013 Jun 1

Fingerprint

social responsibility
investor
commitment
firm
Values
performance
innovation
Corporate Social Responsibility
Investors
market
empirical research
customer
employee
citizen
Financial performance
decision making
health
Corporate financial performance
Performance measures
Innovation

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Business, Management and Accounting(all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law

Cite this

Rodgers, Waymond ; Choy, Hiu Lam ; Guiral, Andrés. / Do Investors Value a Firm's Commitment to Social Activities?. In: Journal of Business Ethics. 2013 ; Vol. 114, No. 4. pp. 607-623.
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Do Investors Value a Firm's Commitment to Social Activities? / Rodgers, Waymond; Choy, Hiu Lam; Guiral, Andrés.

In: Journal of Business Ethics, Vol. 114, No. 4, 01.06.2013, p. 607-623.

Research output: Contribution to journalArticle

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