Impact of Corporate Social Responsibility Awards on Share Prices

  • Zeeshan Mahmood Department of Commerce, Bahauddin Zakariya University, Multan, Pakistan
  • Javed Iqbal Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan.
  • Waris Ali Department of Business Administration, University of Sahiwal, Pakistan.
  • Muhammad Aamir Department of Commerce, Bahauddin Zakariya University, Multan, Pakistan
DOI: https://doi.org/10.26710/jafee.v5i1.682
Keywords: Corporate Social Responsibility (CSR), CSR Awards, Abnormal Return (AR), Cumulative Abnormal Return (CAR), Pakistan Stock Exchange

Abstract

This paper provides empirical evidence to evaluate the business case of corporate social responsibility. In contrast to former studies, we choose to examine the relationship between corporate social responsibility awards and share prices. We examined this relationship in the contextual setting of Pakistan, where several award schemes are operating to reward CSR performance. An event study methodology was adopted to investigate the impact of award announcement on the abnormal return of TOP 100 companies listed on the Pakistan Stock Exchange. A daily price for each company was collected during the estimation window of 120 days before the event window and an event window of 3 days [-1, 0, 1]. Our analysis shows that the overall announcement of CSR awards has an insignificant impact on share price.                                             

Downloads

Download data is not yet available.

Article Analytics Summary

References

Arya, B., & Zhang, G. (2009). Institutional reforms and investor reactions to CSR announcements: Evidence from an emerging economy. Journal of management studies, 46(7), 1089-1112. DOI: https://doi.org/10.1111/j.1467-6486.2009.00836.x

Baird, P. L., Geylani, P. C., & Roberts, J. A. (2012). Corporate social and financial performance re-examined: Industry effects in a linear mixed model analysis. Journal of Business Ethics, 109(3), 367-388. DOI: https://doi.org/10.1007/s10551-011-1135-z

Barone, M. J., Miyazaki, A. D., & Taylor, K. A. (2000). The influence of cause-related marketing on consumer choice: does one good turn deserve another? Journal of the academy of Marketing Science, 28(2), 248-262. DOI: https://doi.org/10.1177/0092070300282006

Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadership behavior. The leadership quarterly, 10(2), 181-217. DOI: https://doi.org/10.1016/S1048-9843(99)00016-8

Basu, K., & Palazzo, G. (2008). Corporate social responsibility: A process model of sensemaking. Academy of management review, 33(1), 122-136. DOI: https://doi.org/10.5465/amr.2008.27745504

Berens, G., Van Riel, C. B., & Van Bruggen, G. H. (2005). Corporate associations and consumer product responses: The moderating role of corporate brand dominance. Journal of marketing, 69(3), 35-48. DOI: https://doi.org/10.1509/jmkg.69.3.35.66357

Brammer, S., Brooks, C., & Pavelin, S. (2009). The stock performance of America's 100 best corporate citizens. The Quarterly Review of Economics and Finance, 49(3), 1065-1080. DOI: https://doi.org/10.1016/j.qref.2009.04.001

Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of management review, 32(3), 946-967. DOI: https://doi.org/10.5465/amr.2007.25275684

Caruana, R., & Crane, A. (2008). Constructing consumer responsibility: Exploring the role of corporate communications. Organization studies, 29(12), 1495-1519. DOI: https://doi.org/10.1177/0170840607096387

Choi, J., & Wang, H. (2009). Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal, 30(8), 895-907. DOI: https://doi.org/10.1002/smj.759

Chollet, P., & Cellier, A. (2011). The impact of corporate social responsibility rating announcements on European stock prices. Paper presented at the International conference of the French finance association (AFFI). DOI: https://doi.org/10.2139/ssrn.1836902

Crouch, C. (2006). Modelling the firm in its market and organizational environment: Methodologies for studying corporate social responsibility. Organization studies, 27(10), 1533-1551. DOI: https://doi.org/10.1177/0170840606068255

Gupta, A. (2006). Impact of earnings announcements on stock prices: some empirical evidences from India. The ICFAI Journal of Applied Finance, 12(3), 5-13.

Kong, S., & Taghavi, M. (2006). The effect of annual earnings announcements on the Chinese Stock Markets. International Advances in Economic Research, 12(3), 318-326. DOI: https://doi.org/10.1007/s11294-006-9020-8

Kothari, S. P., & Warner, J. B. (2007). Econometrics of event studies. In Handbook of empirical corporate finance (pp. 3-36): Elsevier. DOI: https://doi.org/10.1016/B978-0-444-53265-7.50015-9

MacKinlay, A. C. (1997). Event studies in economics and finance. Journal of economic literature, 35(1), 13-39.

Maina, J. (2009). An empirical investigation of stock returns reaction around earnings announcements for quoted companies at NSE. MBA project, University of Nairobi.

Makni, R., Francoeur, C., & Bellavance, F. (2009). Causality between corporate social performance and financial performance: Evidence from Canadian firms. Journal of Business Ethics, 89(3), 409. DOI: https://doi.org/10.1007/s10551-008-0007-7

McWilliams, A., & Siegel, D. (1997). Event studies in management research: Theoretical and empirical issues. Academy of Management journal, 40(3), 626-657. DOI: https://doi.org/10.5465/257056

McWilliams, A., Siegel, D., & Teoh, S. H. (1999). Issues in the use of the event study methodology: A critical analysis of corporate social responsibility studies. Organizational Research Methods, 2(4), 340-365. DOI: https://doi.org/10.1177/109442819924002

McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of management studies, 43(1), 1-18. DOI: https://doi.org/10.1111/j.1467-6486.2006.00580.x

Moskowitz, M. (1972). Choosing socially responsible stocks. Business and Society Review, 1(1), 71-75.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441. DOI: https://doi.org/10.1177/0170840603024003910

Patell, J. M., & Wolfson, M. A. (1984). The intraday speed of adjustment of stock prices to earnings and dividend announcements. Journal of financial economics, 13(2), 223-252. DOI: https://doi.org/10.1016/0304-405X(84)90024-2

Scalet, S., & Kelly, T. F. (2010). CSR rating agencies: what is their global impact? Journal of Business Ethics, 94(1), 69-88. DOI: https://doi.org/10.1007/s10551-009-0250-6

Sen, S., Bhattacharya, C. B., & Korschun, D. (2006). The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the academy of Marketing Science, 34(2), 158-166. DOI: https://doi.org/10.1177/0092070305284978

Simmons, C. J., & Becker-Olsen, K. L. (2006). Achieving marketing objectives through social sponsorships. Journal of marketing, 70(4), 154-169. DOI: https://doi.org/10.1509/jmkg.70.4.154

Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of management review, 10(3), 540-557. DOI: https://doi.org/10.5465/amr.1985.4278989

Vance, S. C. (1975). Are socially responsible corporations good investment risks. Management review, 64(8), 19-24.

Varadarajan, P. R., & Menon, A. (1988). Cause-related marketing: A coalignment of marketing strategy and corporate philanthropy. Journal of marketing, 52(3), 58-74. DOI: https://doi.org/10.1177/002224298805200306

Weber, M. (2008). The business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4), 247-261. DOI: https://doi.org/10.1016/j.emj.2008.01.006

Zanotti, G. (2012). Demutualization and the globalization of stock markets. Handbook of Research on Stock Market Globalization, 163. DOI: https://doi.org/10.4337/9780857938183.00017

Journal of Accounting and Finance in Emerging Economies
Published
2019-06-30
How to Cite
Mahmood, Z., Iqbal, J., Ali, W., & Aamir, M. (2019). Impact of Corporate Social Responsibility Awards on Share Prices. Journal of Accounting and Finance in Emerging Economies, 5(1), 141-154. https://doi.org/10.26710/jafee.v5i1.682
Issue
Vol 5 No 1 (2019): Journal of Accounting and Finance in Emerging Economies
Section
Articles

CSRC Publishing and JAFEE adhere to Creative Commons Attribution-Non Commercial 4.0 International License. The authors, submitting and publishing in the Journal of Accounting and Finance in Emerging Economies published by CSRC Publishing, retain the copyright of their work and give the journal right to publish their work agreeing to the licensing policy under Creative Common Attribution-Non Commercial (NC-BY-NC 4.0) International. Under this license, the published authors let others remix, tweak, and build upon their work non-commercially. Yet all the other authors using the content of CSRC Publishing are required to cite author(s), journal name and publisher in their work. CSRC Publishing and JAFEE follow an Open Access Policy for copyright and licensing. 

Crossref
Scopus
Google Scholar
Europe PMC