Abstract

https://ssrn.com/abstract=2489170
 


 



Can Ratings Have Indirect Effects?: Evidence from the Organizational Response to Peers' Environmental Ratings


Amanda J. Sharkey


University of Chicago - Booth School of Business

Patricia Bromley


University of Utah

August 29, 2014

Forthcoming, American Sociological Review

Abstract:     
Organizations are increasingly subject to rating and ranking by third-party evaluators. Research in this area tends to emphasize the direct effects of ratings systems that occur when ratings give key audiences, such as consumers or investors, more information about a rated firm. Yet, ratings systems may also indirectly influence organizations when the collective presence of more rated peers alters the broader institutional and competitive milieu. Rated firms may be more responsive to ratings systems when surrounded by more rated peers, and ratings may generate diffuse or spillover effects even among firms that are unrated. We test these arguments by analyzing how rated and unrated firms change their pollution behavior when more firms in their peer group are rated on environmental performance. Results indicate that the presence of more rated peers was often associated with emissions reductions. However, this relationship varies by the whether a firm was rated, whether the rating was positive or negative (if rated), and, often, features of the competitive and regulatory environment.

Number of Pages in PDF File: 59

Keywords: ratings, peers, environment, institutional theory, corporate social responsibility


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Date posted: August 30, 2014 ; Last revised: September 18, 2014

Suggested Citation

Sharkey, Amanda J. and Bromley, Patricia, Can Ratings Have Indirect Effects?: Evidence from the Organizational Response to Peers' Environmental Ratings (August 29, 2014). Forthcoming, American Sociological Review. Available at SSRN: https://ssrn.com/abstract=2489170

Contact Information

Amanda J. Sharkey (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Patricia Bromley
University of Utah ( email )
1645 E. Campus Center
Salt Lake City, UT 84112
United States
HOME PAGE: http://www.patriciabromley.com
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