What Drives Investor Response to CSR Performance Reports?

Posted: 20 Jun 2019

See all articles by Andres Guiral

Andres Guiral

Yonsei University

Doocheol Moon

Yonsei University

Hun-Tong Tan

Nanyang Business School, Nanyang Technological University

Yao Yu

University of Massachusetts Amherst - Isenberg School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 12, 2019

Abstract

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

Suggested Citation

Guiral, Andres and Moon, Doocheol and Tan, Hun-Tong and Yu, Yao, What Drives Investor Response to CSR Performance Reports? (February 12, 2019). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3404337

Andres Guiral

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Doocheol Moon

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Hun-Tong Tan (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
+65 6790 4819 (Phone)
+65 6793 7956 (Fax)

Yao Yu

University of Massachusetts Amherst - Isenberg School of Management ( email )

121 Presidents Dr
Amherst, MA 01003-4910
United States
413.545.7615 (Phone)
413.545.3858 (Fax)

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