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Raising Companies’ Profile with Corporate Social Performance

Author

Listed:
  • Philippe Bertrand

    (Aix-Marseille Université, IAE Aix-en-Provence, Cergam and AMSE, and Kedge Business School)

  • Alexis Guyot

    (Audencia Nantes School of Management, Centre for Financial and Risk Management (CFRM),)

  • Vincent Lapointe

    (Aix-Marseille Université (Aix-Marseille School of Economics), CNRS & EHESS)

Abstract

This paper examines whether the initiation of Vigeo Corporate Social Performance (CSP) rating impacts company profiles. Using a sample of European listed firms, we confirm that there is a positive and significant relationship between CSP rating and a firm’s liquidity and investor base. Consistent with the neglected stock effect, this relationship is sensitive to firm size. Our results have important implications for practitioners. Firstly, investment in Corporate Social Responsibility (CSR) could represent an alternative method of improving a company’s stock market quality alongside liquidity provider contracting or market listing transfer. Secondly, when a firm’s board investigates the opportunity to invest in CSR, it should consider the benefits of lowering the company’s cost of capital through the aforementioned effects. Finally, from an asset manager’s perspective, any change in CSP should be taken into account, as it can affect company valuation and therefore portfolio performance.

Suggested Citation

  • Philippe Bertrand & Alexis Guyot & Vincent Lapointe, 2014. "Raising Companies’ Profile with Corporate Social Performance," Bankers, Markets & Investors, ESKA Publishing, issue 130, pages 41-54, May-June.
  • Handle: RePEc:rbq:journl:i:130:p:41-54
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    More about this item

    Keywords

    Corporate Social Performance; Corporate Social Responsibility; Liquidity; Investor Base; Cost of Equity Capital;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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