The Stock Performance of America's 100 Best Corporate Citizens

28 Pages Posted: 3 Nov 2005

See all articles by Stephen J. Brammer

Stephen J. Brammer

University of Bath - School of Management

Chris Brooks

University of Reading - ICMA Centre

Stephen Pavelin

University of Bath - School of Management; University of Reading - Department of Economics

Date Written: October 2005

Abstract

This study considers the stock performance of America's 100 Best Corporate Citizens following the annual survey by Business Ethics. We examine both possible short-term announcement effects around the time of the survey's publication, and whether longer-term returns are higher for firms that are listed as good citizens. We find some evidence of a positive market reaction to a firm's presence in the top 100 firms that are made public, and that holders of the stock of such firms earn small abnormal returns during an announcement window. Over the year following the announcement, companies in the top 100 yield negative abnormal returns of around 3%. However, such companies tend to be large and with high price-to-book values, which existing studies suggest will tend to perform poorly. Once we allow for these firm characteristics, the poor performance of the highly rated firms largely disappears. We also find companies that are newly listed as good citizens and companies in the top 100 but outside the S&P 500 can provide considerable positive abnormal returns to investors.

Keywords: corporate citizenship, Business Ethics 100 Best Corporate Citizens, corporate social responsibility, stock returns, trading rule performance

JEL Classification: G10, G14, M14, M20

Suggested Citation

Brammer, Stephen and Brooks, Chris and Pavelin, Stephen, The Stock Performance of America's 100 Best Corporate Citizens (October 2005). Available at SSRN: https://ssrn.com/abstract=834486 or http://dx.doi.org/10.2139/ssrn.834486

Stephen Brammer

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
01225 826826, ext. 5685 (Phone)

Chris Brooks (Contact Author)

University of Reading - ICMA Centre ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom
+44 118 931 82 39 (Phone)
+44 118 931 47 41 (Fax)

Stephen Pavelin

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

University of Reading - Department of Economics ( email )

Reading, RG6 6AA
United Kingdom

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