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Is Being a Good Corporate Citizen Monetarily Good for the Shareholders? Evidence Based on Companies Announced as 100 Best Corporate Citizens, 2008-2017

We examine the impact on the shareholders of companies announced as the 100 Best Corporate Citizens by the Corporate Responsibility Magazine. The global financial crisis triggered a profound shift in the expectations for companies to be good citizens; hence, we examine the period 2008 – 2017. Correl...

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Bibliographic Details
Published in:Quarterly journal of finance and accounting 2021-06, Vol.59 (3/4), p.37-78
Main Authors: GONDHALEKAR, VIJAY, RATLIFF-MILLER, PAULETTE, PICARD, JOERG
Format: Article
Language:English
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Summary:We examine the impact on the shareholders of companies announced as the 100 Best Corporate Citizens by the Corporate Responsibility Magazine. The global financial crisis triggered a profound shift in the expectations for companies to be good citizens; hence, we examine the period 2008 – 2017. Correlations between the ranks of these firms on the dimensions used for rating their overall citizenship suggest that these firms have been deploying significant financial resources towards climate change and environment issues. Further, we find that the average abnormal return to the shareholders at the time of announcement and over three subsequent years is significantly negative (-0.21% and -7.2%, respectively). Panel regressions indicate that the better the rankings of these firms on the Climate Change, Employee Relations and Financial Performance dimensions, the worse their post-announcement abnormal returns. We discuss possible explanations that are consistent with these findings.
ISSN:1939-8123
2327-8250