The Relation between Corporate Social Responsibility and Stock Prices: An Analysis of the Italian Listed Companies

36 Pages Posted: 17 Jan 2012

Date Written: January 16, 2012


This study investigates the impact of Corporate Social Performance on stock prices of Italian listed companies. The main stream of literature focuses on the relation between Corporate Social Responsibility and financial performance, showing contradictory results that still feed a debate, which has not yet reached a unanimous and widely shared position. As far as the measure of performance is concerned, we selected stock prices as a proxy for financial performance. The idea behind this choice is the attempt to measure the perception and reaction of financial markets to the companies’ socially responsible behaviors. Using different social performance indicators concerning environment, community and employment activities, we found evidence that a good social performance has a negative influence on stock prices in the Italian Stock Exchange Market. This phenomenon is particularly evident if the environmental strategies of the Italian listed companies are considered. Hence, the Italian investors perceive these practices as avoidable expenses reducing shareholders’ income and companies’ value and recognize a negative market premium, in terms of lower stock prices, to socially responsible enterprises. This evidence is consistent with the peculiarities of the Italian capitalism structure, which, because of its backwardness in CSR topics and related issues, seems to be not yet mature enough to evaluate appropriately the value of these policies.

Keywords: Corporate Social Responsibility, Corporate Social Performance, Stock Price, Employees, Community, Environment

JEL Classification: M14, A13, G12, D21

Suggested Citation

Izzo, Maria Federica and di Donato, Francesca, The Relation between Corporate Social Responsibility and Stock Prices: An Analysis of the Italian Listed Companies (January 16, 2012). Available at SSRN: or

Maria Federica Izzo (Contact Author)

Luiss Guido Carli University ( email )

viale Pola 12
Roma, Roma 00198

Francesca Di Donato

UNINT ( email )

Via Cristoforo Colombo 200
Roma, Roma 00100

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