Investor Sentiment for Corporate Social Performance

43 Pages Posted: 11 May 2015 Last revised: 6 Nov 2018

See all articles by James P. Naughton

James P. Naughton

Northwestern University - Kellogg School of Management

Clare Wang

University of Colorado at Boulder - Leeds School of Business

Ira Yeung

University of British Columbia (UBC) - Sauder School of Business

Date Written: October 21, 2018

Abstract

We document time varying investor sentiment for corporate social responsibility (“CSR”) performance. We show that announcements of CSR activities generate positive abnormal returns during periods when investors place a valuation premium on CSR performance. In addition, we find that firms boost CSR performance in response to investor sentiment, and that this response is more pronounced for those firms that are more inclined to respond to investor sentiment due to valuation uncertainty and investor horizon. Our results suggest that investor sentiment plays a role in firms’ commitment to CSR.

Keywords: , Investor Sentiment, Corporate Social Responsibility

JEL Classification: M41, D82, G14, G30, G31, G32, G34

Suggested Citation

Naughton, James P. and Wang, Clare and Yeung, Ira, Investor Sentiment for Corporate Social Performance (October 21, 2018). The Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2604558

James P. Naughton (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Clare Wang

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Ira Yeung

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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