Investors' Reactions to CSR News in Family vs. Nonfamily Firms: A Study on Signal (In)Credibility

Entrepreneurship Theory and Practice

45 Pages Posted: 29 Mar 2021 Last revised: 12 Jul 2023

See all articles by Naciye Sekerci

Naciye Sekerci

KU Leuven, Department Accounting, Finance and Insurance; Lund University

Jamil Jaballah

affiliation not provided to SSRN

Marc van Essen

University of South Carolina - Darla Moore School of Business; University of South Carolina - Darla Moore School of Business

Nadine Kammerlander

WHU - Otto Beisheim School of Management

Date Written: March 25, 2021

Abstract

We study family firm status as an important condition in signaling theory; specifically, we propose that the market reacts more positively to positive, and more negatively to negative, CSR news (i.e., signals) from family firms than to similar news from nonfamily firms. Moreover, we propose that during recessions, the direction of these relationships reverses. Based on an event study of 1,247 positive and negative changes in the CSR ratings for all firms listed on the French SFB120 stock market index (2003-2013), we find support for our hypotheses. Moreover, a post hoc analysis reveals that the relationships are contingent on whether a family CEO leads the firm.

Keywords: family firms, signaling theory, corporate social responsibility, market reaction, recession, family CEO

JEL Classification: G30

Suggested Citation

Sekerci, Naciye and Jaballah, Jamil and Essen, Marc van and Essen, Marc van and Kammerlander, Nadine, Investors' Reactions to CSR News in Family vs. Nonfamily Firms: A Study on Signal (In)Credibility (March 25, 2021). Entrepreneurship Theory and Practice, Available at SSRN: https://ssrn.com/abstract=3812408

Naciye Sekerci (Contact Author)

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Lund University ( email )

Lund

Jamil Jaballah

affiliation not provided to SSRN

Marc van Essen

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Nadine Kammerlander

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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