The Risk of Being Ranked: Investor Response to Marginal Inclusion on the 100 Best Corporate Citizens List
Forthcoming in the Strategic Management Journal Special Issue on Question-Driven and Phenomenon-Based Empirical Strategy Research
62 Pages Posted: 12 Feb 2018 Last revised: 30 Jun 2019
Date Written: June 28, 2019
Despite the proliferation of lists and rankings that recognize firms for superior performance, empirical studies have been limited in their ability to causally evaluate how inclusion for the marginal firm influences shareholder value. Using a regression discontinuity design, we address this limitation by examining how investors responded to firms that were just barely included or excluded from the 100 Best Corporate Citizens list. Contrary to prevailing theoretical expectations, our findings indicate that marginal firms that were included in the ranking experienced negative abnormal returns compared to marginal firms that were excluded. We discuss how these findings inspire future research on rankings and status and highlight implications for managers considering strategic decisions related to pursuing rankings.
Keywords: rankings, status, reputation, regression discontinuity, corporate social responsibility
JEL Classification: M14
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