What Drives Investor Response to CSR Performance Reports?
49 Pages Posted: 24 Jan 2019 Last revised: 22 Feb 2019
Date Written: October 30, 2018
Recent research finds that investors’ assessments of a stock’s fundamental value are influenced by CSR performance through the affect-as-information heuristic (Elliott et al. 2014). We extend prior research by examining two boundary conditions for the use of this heuristic: (1) whether the CSR performance relates to activities that are integrated in a firm’s core business practices (material CSR issues) or not (immaterial CSR issues), and (2) whether the CSR performance is positive or negative. Employing an experimental method, we find that the affect-as-information heuristic applies only to immaterial CSR issues but not to material CSR issues, and only to positive but not negative CSR performance. Our findings suggest that investors likely use a heuristic approach to process immaterial and positive CSR issues, and a more deliberate and systematic approach to process material or negative CSR issues. Our study has both practical and theoretical implications.
Keywords: corporate social responsibility, material sustainability, core business activities, unintentional judgments, systematic versus heuristic processing
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