Abstract: We analyze an extensive proprietary database of corporate social responsibility engagements with US public companies over 1999–2009. Engagements address environmental, social, and governance concerns. They are followed by a one-year abnormal return that averages +1.8%, comprising +4.4% for successful and zero for unsuccessful engagements. We document outperformance following environmental/social, as well as governance, engagements. Companies are more likely to be engaged, and success of engagements is more probable, if the target firm is concerned about its reputation and if it has higher capacity to implement changes. After successful engagements, companies experience improvements in operating performance, profitability, efficiency, and governance.
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Paul Hoff
Business Development Director Asia Pacific for ERI Scientific Beta
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