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Changes in Corporate Social Responsibility and Stock Performance

Author

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  • Hui-Ju Tsai

    (Washington College)

  • Yangru Wu

    (Rutgers University)

Abstract

We study the relationship between corporate social performance and financial performance by comparing the portfolio returns of firms with changes in corporate social responsibility (CSR) intensity. Using an extensive US sample from the MSCI ESG database, we find that improvement in the overall CSR is generally value enhancing. The relationship varies with CSR dimensions. More importantly, the relationship shifts differently for various CSR dimensions during the crisis period when trust in the society is low and financial resource is limited. Improvement in environment, human rights, and product characteristics shows higher financial returns during the financial crisis period, whereas the value enhancement of improvement in employee relations is more pronounced during the non-crisis period.

Suggested Citation

  • Hui-Ju Tsai & Yangru Wu, 2022. "Changes in Corporate Social Responsibility and Stock Performance," Journal of Business Ethics, Springer, vol. 178(3), pages 735-755, July.
    • Handle: RePEc:kap:jbuset:v:178:y:2022:i:3:d:10.1007_s10551-021-04772-w
    DOI: 10.1007/s10551-021-04772-w
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    More about this item

    Keywords

    Corporate social responsibility (CSR); Corporate social performance (CSP); Financial performance; Social capital;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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