Raising Companies’ Profile with Corporate Social Performance: Variations in Investor Recognition and Liquidity Linked to VIGEO CSP Rating Disclosures

Bankers, Markets & Investors (Forthcoming)

19 Pages Posted: 2 Dec 2012 Last revised: 11 Jun 2014

See all articles by Philippe Bertrand

Philippe Bertrand

AMGSM-IAE Aix-en-Provence, Aix Marseille University, CERGAM; KEDGE Business School

Alexis Guyot

Euromed Marseille Ecole de Management

Vincent Lapointe

Ostrum AM

Date Written: October 1, 2013

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 liquidity effect. 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.

Keywords: corporate social responsibility, liquidity, investor base, cost of equity capital

JEL Classification: G32, G34, M14

Suggested Citation

Bertrand, Philippe and Guyot, Alexis and Lapointe, Vincent, Raising Companies’ Profile with Corporate Social Performance: Variations in Investor Recognition and Liquidity Linked to VIGEO CSP Rating Disclosures (October 1, 2013). Bankers, Markets & Investors (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2183599 or http://dx.doi.org/10.2139/ssrn.2183599

Philippe Bertrand

AMGSM-IAE Aix-en-Provence, Aix Marseille University, CERGAM ( email )

Chemin de la Quille - Puyricard
Aix en Provence, 13089
France

KEDGE Business School ( email )

Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
France

Alexis Guyot

Euromed Marseille Ecole de Management ( email )

Domaine de Luminy
BP 921 13288 Marseille Cedex 9, 13288
France

Vincent Lapointe (Contact Author)

Ostrum AM ( email )

Paris
France

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