Corporate social responsibility and stock prices after the financial crisis: The role of strategic CSR activities
This is a pre-print of an article published in the Journal of Business Ethics (2023). The final authenticated version is available online at DOI: doi.org/10.1007/s10551-021-04935-9
40 Pages Posted: 29 Apr 2020 Last revised: 3 Jan 2023
Date Written: August 25, 2021
We analyze the relationship between corporate social responsibility and the stock market performance in the post-global financial crisis period. A new measure of social responsibility by Thomson Reuters, called the ESG Combined Score, is used. As a novel feature of our analysis, socially responsible engagement is divided into the strategic activities closely related to the examined companies' core business and the remaining secondary activities. The results of the fixed effects regression show a positive and statistically, as well as economically, significant impact of the strategic activities on the corporate stock market performance of companies. This impact is up to 103% higher compared to the secondary activities. The empirical results suggest that if companies aim to increase their share prices via the corporate social responsibility channel, they should strategically select their socially responsible initiatives.
Keywords: corporate social responsibility, strategic CSR, business ethics, corporate financial performance, fixed effects
JEL Classification: A13, C23, G11
Suggested Citation: Suggested Citation