nach oben

Journal of Business Ethics

Erschienen in:

01.06.2013

Do Investors Value a Firm’s Commitment to Social Activities?

verfasst von: Waymond Rodgers, Hiu Lam Choy, Andrés Guiral

Erschienen in: Journal of Business Ethics | Ausgabe 4/2013

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Vorheriger Artikel The Business Case for Asserting the Business Case for Business Ethics

Nächster Artikel Corporate Social Performance, Firm Valuation, and Industrial Difference: Evidence from Hong Kong

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

See the special issue on “Corporate Social Responsibility: Strategic Implications” in Journal of Management Studies (volume 43, issue 1, January 2006) and the special topic forum on “Corporations as Social Change Agents” in Academy of Management Review (volume 32, issue 3, July 2007). Also, see previous special research forum on “Stakeholders, Social Responsibility, and Performance” in Academy of Management Journal (volume 42, issue 5, October 1999).

Moreover, McWilliams et al. (2006), McWilliams and Siegel (2000), and Barnett (2007) argue that the lack of consistency in previous findings may be a consequence of poor definition of the financial performance and CSR constructs, imprecision in research design, model specification biases and deficient analysis of the results.

Tobin’s Q depicts the market’s valuation of a company compared to its assets-in-place (Smith and Watts 1992).

The only exception is the community dimension of CSR. The interaction between the community dimension and the investment in innovation has a positive effect on Tobin’s Q.

For example, the firm has an implicit contract with its customers on the quality of products and services. Customers have an implicit claim on the firm when the product does not meet quality standard (e.g., product recalls for safety concern).

Peloza (2006) also suggests that corporate social activities, in terms of firm reputation, may play an important role in mitigating the potential consequences of future damaging events.

For example, Ford Motor was selected Latina Style magazine’s 2004 Fifty Best Companies based on, among other criteria, its mentoring program and its relationship with the Hispanic community. This publicity can help Ford to attract better prospective employees (Greening and Turban 2000; Turban and Greening 1997), increase customer-company identification (Sen and Bhattacharya 2001) and affect customers’ product attitude (Berens et al. 2005).

Both McWilliams and Siegel (2000) and Hull and Rothenberg (2008) based their conclusion on a single accounting-based measure: profitability (proxied by return on assets ratio).

Indicators for our latent variables are shown in Fig. 1.

Numerous accounting studies have used Zmijewski score for the recognition of financial distressed firms (e.g., Pava and Krausz, 1996; Ruiz-Barbadillo et al., 2004; Johnstone and Bedard, 2004; Carcello and Nagy, 2004). Since we are interested in the effect of CSR on a firm’s performance, we use the negative of Zmijewski score as a proxy for the firm’s financial health. We have also repeated our analyses using the inverse of Zmijewski score as a proxy and the tenor of the results does not change.

Once again in model 3, firms with a better financial health had higher profitability (β ₁ = .351, p < .01), higher liquidity (β ₂ = .118, p < .01), and less leverage (β ₃ = -.799, p < .01). Also, the KLD measures latent variable explained most of the variance of the CSR construct (β ₅ = .920, p < .01; R ² = .847).

While McWilliams and Siegel (2000) reported a correlation between CSR and innovation of 0.499 (p < 0.01) over the period of 1991–1996, Hull and Rothenberg (2008) found a correlation of −0.166 (p < 0.05) over the period of 1998–2001.

In their study, Barnett and Salomon (2006) employed risk-adjusted financial performance as the dependent variable, measured as the monthly percentage change in a fund’s market value adjusted by the fund’s specific beta.

This argument is consistent with Paul and Siegel (2006) and Vitaliano and Stella (2006) suggesting that CSR seems to be a management choice based on balancing marginal cost and marginal revenue.

Amir, E., & Lev, B. (1996). Value-relevance of nonfinancial information: The wireless communications industry. Journal of Accounting and Economics, 22, 3–30.CrossRef

Aupperle, K., Carroll, A., & Hatfield, J. (1985). An empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management Journal, 28, 446–463.CrossRef

Ballou, B., Godwin, N. H., & Shortridge, R. B. (2003). Firm value and employee attitudes on workplace quality. Accounting Horizons, 17, 329–341.CrossRef

Barnett, M. L. (2007). Stakeholder influence capacity and the variability of financial returns to corporate social responsibility. Academy of Management Review, 32, 1–50.CrossRef

Barnett, M. L., & Salomon, R. M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27, 1101–1122.CrossRef

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.CrossRef

Berens, G., Van Riel, C. B., & Van Bruggen, M. (2005). Corporate associations and consumer product responses: The moderating role of corporate brand dominance. Journal of Marketing, 69, 35–48.CrossRef

Blanco, B., Guillamon-Saorin, E., & Guiral, A. (2012). Do non-socially responsible companies achieve legitimacy through socially responsible actions? The mediating effect of innovation. Journal of Business Ethics. doi:10.1007/s10551-012-1503-3.

Carcello, J. V., & Nagy, A. L. (2004). Audit firm tenure and fraudulent financial reporting. Auditing: A Journal of Practice & Theory, 23, 57–71.CrossRef

Chin, W. W. (1998). Issues and opinion on structural equation modeling. MIS Quarterly, 22, 7–16.

Chin, W. W., Marcolin, B. L., & Newsted, P. R. (2003). A partial least squares latent variable modeling approach for measuring interaction effects: Results from a Monte Carlo simulation study and an electronic mail emotion/adoption study. Information Systems Research, 14, 189–217.CrossRef

Collins, C. J., & Smith, K. G. (2006). Knowledge exchange and combination: The role of human resource practices in the performance of high-technology firms. Academy of Management Journal, 49, 544–560.CrossRef

Cornell, B., & Shapiro, A. (1987). Corporate social responsibility and financial performance. Academy of Management Review, 4, 497–505.

Davis, K. (1973). The case for and against business assumptions of social responsibilities. Academy of Management Journal, 16, 312–317.CrossRef

Demers, E., & Lev, B. (2001). A rude awakening: Internet shakeout in 2000. Review of Accounting Studies, 6, 331–359.CrossRef

Ernst & Young. (2009). Beyond Borders: The global biotechnology report. http://www.ey.com/CH/en/Newsroom/News-releases/20090505-Beyond-Borders-Ernst-Young-Global-Biotechnology-Report-2009-Global-financial-crisis-profoundly-strains-biotechnology-business-model.

Falk, R. F. (1987). A primer for soft modeling. Berkeley: University of California Institute of Human Development.

FASB. (1980). Statement of Financial Accounting Concepts No. 2, Qualitative Characteristics of Accounting Information. Financial Accounting Standard Board. http://www.fasb.org/pdf/aop_CON2.pdf.

Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18, 39–50.CrossRef

Foss, K., & Rodgers, W. (2011). Enhancing information usefulness by line managers’ involvement in cross-unit activities. Organization Studies, 32, 683–703.CrossRef

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Marshfield, MA: Pitman.

Garcia-Castro, R., Ariño, M. A., & Canela, M. A. (2010). Does social performance really lead to financial performance? Accounting for endogeneity. Journal of Business Ethics, 921, 107–126.CrossRef

Greening, D. W., & Turban, D. B. (2000). Corporate social performance as a competitive advantage in attracting a quality workforce. Business and Society, 39, 254–280.CrossRef

Griffin, J. J., & Mahon, J. F. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incomparable research. Business and Society, 36, 5–31.CrossRef

Guiral, A. (2012). Corporate social performance, innovation intensity and financial performance: Evidence from lending decisions. Behavioral Research in Accounting, 24(2), 65–85.CrossRef

Harrison, J. S., & Freeman, R. E. (1999). Stakeholders, social responsibility, and performance: Empirical evidence and theoretical perspectives. Academy of Management Journal, 42, 479–485.CrossRef

Hein, S. (1981). Employees and the corporate social report: The Dutch case. The Accounting Review, 56, 294–308.

Hull, C. E., & Rothenberg, S. (2008). Firm performance: The interactions of corporate social performance with innovation and industry differentiation. Strategic Management Journal, 29, 781–789.CrossRef

Johnstone, K. M., & Bedard, J. C. (2004). Audit firm portfolio management decisions. Journal of Accounting Research, 424, 659–690.CrossRef

Jones, T. M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20, 404–437.

Kaplan, S., & Zingales, L. (1997). Do investment-cash flow sensitivities provide useful measures of financing constraints? Quarterly Journal of Economics, 112, 169–215.CrossRef

Lev, B., & Sarowin, P. (1999). The boundaries of financial reporting and how to extend them. Journal of Accounting Research, 372, 353–385.CrossRef

Lichtenberg, F., & Siegel, D. (1991). The impact of R&D investment on productivity: New evidence using linked R&D-LRD data. Economic Inquiry, 29, 203–228.CrossRef

Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing, 70, 1–18.CrossRef

Maiga, A. S., & Jacobs, F. A. (2005). Antecedents and consequences of quality performance. Behavioral Research in Accounting, 17, 111–131.CrossRef

Margolis, J. D., & Walsh, J. P. (2001). People and profits? The search for a link between a company’s social and financial performance. Mahwah, NJ: Lawrence Erlbaum Associates.

Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48, 655–689.CrossRef

McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. Academy of Management Journal, 31, 854–872.CrossRef

McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21, 603–609.CrossRef

McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26, 117–127.

McWilliams, A., Siegel, D., & Wright, P. M. (2006). Guest editors’ introduction. Corporate social responsibility: Strategic implications. Journal of Management Studies, 43, 1–18.CrossRef

Nunnally, J. C. (1978). Psychometric theory. New York: McGraw Hill.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24, 403–441.CrossRef

Paul, C. M., & Siegel, D. (2006). Corporate social responsibility and economic performance. Journal of Productivity Analysis, 263, 207–211.CrossRef

Pava, M. L., & Krausz, J. (1996). The association between corporate social-responsibility and financial performance: The paradox of social cost. Journal of Business Ethics, 15, 321–357.CrossRef

Peloza, J. (2006). Using corporate social responsibility as insurance for financial performance. California Management Review, 48, 52–72.CrossRef

Peloza, J. (2009). The challenge of measuring financial impacts from investments in corporate social performance. Journal of Management, 356, 1518–1541.CrossRef

Preston, L. E., & O’Bannon, D. P. (1997). The corporate social–financial performance relationship: A typology and analysis. Business and Society, 36, 419–429.CrossRef

Prior, D., Surroca, J., & Tribo, J. A. (2008). Are socially responsible managers really ethical? Exploring the relationship between earnings management and corporate social responsibility. Corporate Governance, 16, 160–177.CrossRef

Reichheld, F. (2003). The one number you need to grow. Harvard Business Review, 81, 46–54.

Rodgers, W. (1997). Throughput modeling: Financial information used by decision makers. Greenwich, CT: JAI Press.

Roman, R. M., Hayibor, S., & Alge, B. R. (1999). The relationship between social and financial performance: Repainting a portrait. Business and Society, 38, 109–125.CrossRef

Ruf, B. M., Muralidhar, K., Brown, R. M., Janney, J. J., & Paul, K. (2001). An empirical investigation of the relationship between change in corporate social performance and financial performance: A stakeholder theory perspective. Journal of Business Ethics, 32, 143–156.CrossRef

Ruiz-Barbadillo, E., Gómez-Aguilar, N., Fuentes-Barberá, C., & Garcí-Benau, M. A. (2004). Audit quality and the going-concern decision-making process: Spanish evidence. European Accounting Review, 134, 597–620.CrossRef

Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 20, 534–559.CrossRef

Schuler, D. A., & Cording, M. (2006). A corporate social performance-corporate financial performance behavioral model for consumers. Academy of Management Review, 3, 540–558.CrossRef

Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of Marketing Research, 38, 225–243.CrossRef

Sen, S., Bhattacharya, C. B., & Korschun, D. (2006). The role of corporate social responsibility in strengthening multiple stakeholder relationships: a field experiment. Journal of the Academy of Marketing Science, 34, 158–166.CrossRef

Smith, C., & Watts, R. (1992). The investment opportunity set and corporate financing, dividend, and compensation policies. Journal of Financial Economics, 32, 263–292.CrossRef

Sundaram, A. K., & Inkpen, A. C. (2004). The corporate objective revisited. Organization Science, 15, 350–363.CrossRef

Surroca, J., Tribó, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources. Strategic Management Journal, 315, 463–490.

Trueman, B., Wong, T. J., & Zhang, X. J. (2000). The eyeballs have it: Searching for the value in internet stocks. Journal of Accounting Research, 38, 137–162.CrossRef

Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40, 658–672.CrossRef

Ullmann, A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance. Academy of Management Review, 10, 540–577.

Vitaliano, D., & Stella, G. (2006). The cost of corporate social responsibility: The case of the community reinvestment act. Journal of Productivity Analysis, 263, 235–244.CrossRef

Voss, R., & Gruber, T. (2005). Complaint handling at the Schindlerhof Hotel with praise and assessment cards. Management Services, 49, 16–19.

Waddock, S. A., & Graves, S. B. (1997). The corporate social performance–financial performance link. Strategic Management Journal, 18, 303–319.CrossRef

Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5, 171–180.CrossRef

Williamson, O. E. (1985). The economic institutions of capitalism. New York: The Free Press.

Wood, D. J., & Jones, R. E. (1995). Stakeholder mismatching: A theoretical problem in empirical research on corporate social performance. International Journal of Organizational Analysis, 3, 229–267.CrossRef

Xu, B., Magnan, M. L., & Andre, P. E. (2007). The stock market valuation of R&D information in biotech firms. Contemporary Accounting Research, 244, 1291–1318.CrossRef

Zmijewski, M. E. (1984). Methodological issues related to the estimation of financial distress prediction models. Journal of Accounting Research, 22(Supplement), 59–82.CrossRef

Titel: Do Investors Value a Firm’s Commitment to Social Activities?
verfasst von: Waymond Rodgers
Hiu Lam Choy
Andrés Guiral
Publikationsdatum: 01.06.2013
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 4/2013
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-013-1707-1

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 4/2013

Social Responsibility Climate as a Double-Edged Sword: How Employee-Perceived Social Responsibility Climate Shapes the Meaning of Their Voluntary Work?

The Business Case for Asserting the Business Case for Business Ethics

Cross-Cultural Perceptions of Business Ethics: Evidence from the United States and China

Corporate Social Performance, Firm Valuation, and Industrial Difference: Evidence from Hong Kong

The Normalization of Deviant Organizational Practices: The Non-performing Loans Problem in China

The Roles of Justice and Customer Satisfaction in Customer Retention: A Lesson from Service Recovery

Premium Partner