RT Article
T1 Corporate Social Responsibility, Investor Behaviors, and Stock Market Returns: Evidence from a Natural Experiment in China
JF Journal of business ethics
VO 101
IS 1
SP 127
OP 141
A1 Wang, Maobin
A1 Qiu, Chun
A1 Kong, Dongmin
A2 Qiu, Chun
A2 Kong, Dongmin
LA English
YR 2011
UL https://ixtheo.de/Record/1785642065
AB This article studies how financial investors respond to firms’ corporate social responsibility (CSR) performance in terms of their investing behaviors, and how such behaviors change contingent on an event that provokes their attention and concerns to CSR. Using the melamine contamination incident in China as a natural experiment, it is found that neither the individual investors’ nor the institutional investors’ behaviors are influenced by firms’ CSR performance before the incident. Nevertheless, in the post-event period, institutional investors’ behaviors are significantly influenced by firms’ CSR performance that exceeds a certain threshold. Furthermore, such an effect diminishes for a better CSR performance. In comparison, the authors do not find any effects of CSR performance on individual investors, either before the event or after the event. Finally, firms’ performance and investors’ behaviors jointly affect firms’ stock returns after the event but not before the event. This article reconciles the mixed findings in the literature on the effect of firms’ CSR performance on their financial performance by showing that such an effect exists in a contingent manner. Furthermore, the authors show that a too low or a too high CSR performance could lead to undesirable responses from investors. Therefore, managers should pay attention to optimizing firms’ CSR activities.
K1 Chinese stock market
K1 Emerging markets
K1 investors’ behaviors
K1 Event Study
K1 stock markets
K1 Financial Performance
K1 Corporate Social Responsibility
DO 10.1007/s10551-010-0713-9