What Corporate Social Responsibility Activities Are Valued by the Market?

Corporate management is torn between either focusing solely on the interests of stockholders (the neo-classical view) or taking into account the interests of a wide spectrum of stakeholders (the stakeholder theory view). Of course, there need be no conflict where taking the wider view is also consis...

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Bibliographic Details
Published in:Journal of business ethics 2007-12, Vol.76 (2), p.189-206
Main Authors: Bird, Ron, Hall, Anthony D., Momentè, Francesco, Reggiani, Francesco
Format: Article
Language:English
Subjects:
Business ethics
Business management
Business structures
Business studies
Community life
Control variables
corporate performance
Corporate responsibility
Corporate social responsibility
Econometrics
Employees
Financial performance
Management decisions
Management principles
Present value
shareholder value
Shareholders
Shareholders wealth
Social responsibility
Stakeholder
Stakeholders
Stockholders
Studies
value-based management
Variable coefficients
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Summary:Corporate management is torn between either focusing solely on the interests of stockholders (the neo-classical view) or taking into account the interests of a wide spectrum of stakeholders (the stakeholder theory view). Of course, there need be no conflict where taking the wider view is also consistent with maximising stockholder wealth. In this paper, we examine the extent to which a conflict actually exists by examining the relationship between a company's positive (strengths) and negative (concerns) corporate social responsibility (CSR) activities and equity performance. In general, we find little evidence to suggest that managers taking a wider stakeholder perspective will jeopardise the interest of its stockholders. However, our findings do suggest that the market is not only influenced by the independent CSR activities, but also the totality of these activities and that the facets that they value do vary over time. It seems that most recently, the market has valued most firms that satisfied minimum requirements in the areas of diversity and environmental protection but were most proactive in the area of employee-relations.
ISSN:0167-4544
1573-0697
DOI:10.1007/s10551-006-9268-1