References (55)


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Strange Bedfellows? - Voluntary CSR Disclosure and Politics

Paul A. Griffin

University of California, Davis - Graduate School of Management

Yuan Sun

Boston University - Questrom School of Business

February 12, 2013

Forthcoming in Accounting & Finance

Based on a comprehensive sample of companies’ voluntary disclosures about corporate social responsibility from the CSRwire news service, we show a reliable association between the CSR disclosure intensity of a company and its political interests, which we proxy by the contributions of company individuals to political action committees registered with the Federal Election Commission and statewide voting in presidential elections. This relation is most pronounced for the contributions of Democratic individuals who work at companies in states where the voting favors the Democratic presidential candidate. We then examine if those contributions add shareholder value by testing whether they explain investors’ response to CSR news disclosure. Our tests show a positive and significant association between corporate political contributions and excess stock returns. These results are the first of which we are aware to establish, in the context of corporate social responsibility, that political contributions by company individuals associate with economic gains to shareholders. A portfolio strategy of investing based on company size, CSR disclosure intensity, and company individuals’ political contributions produces a significant positive mean excess stock return of 4.5 percent over three months following CSR disclosure. These results challenge the widely held belief that money does not seem to curry favor with politicians or regulators to improve the standing of shareholders.

Number of Pages in PDF File: 46

Keywords: corporate social responsibility, voluntary disclosure, stock market response, corporate political contributions, political action committees, presidential voting

JEL Classification: G14, M41, M45, K22, Q20

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Date posted: October 31, 2012 ; Last revised: February 14, 2013

Suggested Citation

Griffin, Paul A. and Sun, Yuan, Strange Bedfellows? - Voluntary CSR Disclosure and Politics (February 12, 2013). Forthcoming in Accounting & Finance. Available at SSRN: http://ssrn.com/abstract=2168578 or http://dx.doi.org/10.2139/ssrn.2168578

Contact Information

Paul A. Griffin (Contact Author)
University of California, Davis - Graduate School of Management ( email )
3102 Gallahger Hall
Davis, CA 95616
United States
(530) 752-7372 (Phone)
(425) 799-4143 (Fax)
HOME PAGE: http://www.gsm.ucdavis.edu/griffin/

Yuan Sun
Boston University - Questrom School of Business ( email )
595 Commonwealth Avenue
Boston, MA MA 02215
United States
1-617-353-2353 (Phone)
Feedback to SSRN

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References:  55
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