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The stock performance of America's 100 Best Corporate Citizens

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  • Brammer, Stephen
  • Brooks, Chris
  • Pavelin, Stephen

Abstract

We consider the stock performance of America's 100 Best Corporate Citizens following the annual survey by Business Ethics. We examine both possible short-term announcement effects around the time of the survey's publication, and whether longer-term returns are higher for firms that are listed as good citizens. We find some evidence of a positive market reaction to a firm's presence in the Top 100 firms that are made public, and that holders of the stock of such firms earn small abnormal returns during an announcement window. Over the year following the announcement, companies in the Top 100 yield negative abnormal returns of around 3%. However, such companies tend to be large and with stocks exhibiting a growth style, which existing studies suggest will tend to perform poorly. Once we allow for these firm characteristics, the poor performance of the highly rated firms declines. We also find companies that are newly listed as good citizens and companies in the Top 100 but outside the S&P 500 can provide considerable positive abnormal returns to investors, even after allowing for their market capitalization, price-to-book ratios, and sectoral classification.

Suggested Citation

  • Brammer, Stephen & Brooks, Chris & Pavelin, Stephen, 2009. "The stock performance of America's 100 Best Corporate Citizens," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(3), pages 1065-1080, August.
  • Handle: RePEc:eee:quaeco:v:49:y:2009:i:3:p:1065-1080
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    Cited by:

    1. Tzu-Kuan Chiu & Yi-Hsin Wang, 2015. "Determinants of Social Disclosure Quality in Taiwan: An Application of Stakeholder Theory," Journal of Business Ethics, Springer, vol. 129(2), pages 379-398, June.
    2. Nollet, Joscha & Filis, George & Mitrokostas, Evangelos, 2016. "Corporate social responsibility and financial performance: A non-linear and disaggregated approach," Economic Modelling, Elsevier, vol. 52(PB), pages 400-407.
    3. Ioannis Oikonomou & Chris Brooks & Stephen Pavelin, 2014. "The Financial Effects of Uniform and Mixed Corporate Social Performance," Journal of Management Studies, Wiley Blackwell, vol. 51(6), pages 898-925, September.
    4. Sylvia Maxfield, 2008. "Reconciling Corporate Citizenship and Competitive Strategy: Insights from Economic Theory," Journal of Business Ethics, Springer, vol. 80(2), pages 367-377, June.
    5. Ming Jia & Zhe Zhang, 2014. "How Does the Stock Market Value Corporate Social Performance? When Behavioral Theories Interact with Stakeholder Theory," Journal of Business Ethics, Springer, vol. 125(3), pages 433-465, December.
    6. Chung-Hua Shen & Yuan Chang, 2009. "Ambition Versus Conscience, Does Corporate Social Responsibility Pay off? The Application of Matching Methods," Journal of Business Ethics, Springer, vol. 88(1), pages 133-153, April.

    More about this item

    Keywords

    Corporate citizenship Business Ethics 100 Best Corporate Citizens Corporate social responsibility Stock returns Trading rule performance;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

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