The Library

The stock performance of America's 100 Best Corporate Citizens

Tools

Brammer, Stephen, Brooks, Chris and Pavelin, Stephen. (2009) The stock performance of America's 100 Best Corporate Citizens. Quarterly Review of Economics & Finance, Vol.49 (No.3). 1065 - 1080. ISSN 1062-9769

[img] PDF (Version received does not comply with publishers policy.)
Brammer,_Brooks_and_Pavelin_(2009)_QREF - Published Version
Restricted to Repository staff only - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (237Kb)

Abstract

We consider 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 stocks exhibiting a growth style, which existing studies suggest will tend to perform poorly. Once we allow for these firm characteristics, the poor performance of the highly rated firms declines. 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, even after allowing for their market capitalization, price-to-book ratios, and sectoral classification.

Item Type: Journal Article
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Warwick Business School
Library of Congress Subject Headings (LCSH): Stocks -- Prices -- United States, Business ethics, Social responsibility of business
Journal or Publication Title: Quarterly Review of Economics & Finance
Publisher: Elsevier BV
ISSN: 1062-9769
Official Date: August 2009
Volume: Vol.49
Number: No.3
Page Range: 1065 - 1080
Identification Number: 10.1016/j.qref.2009.04.001
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access
References:

Allen, G., & Kask, S. (1997). Socially responsible firms: Financial and market performance. Journal of Business and Economic
Perspectives, 23(2), 86–96.
Antunovich, P., & Laster, D. S. (2000). Do investors mistake a good company for a good investment? Journal of Investing Spring,
61–71.
Antunovich, P., Laster, D. S.,&Mitnick, S. (2000). Are high-quality firms also high-quality investments? Current Issues in Economics
and Finance, 6, 1–6.
Barber, B. M., & Lyon, J. D. (1997). Detecting long-run abnormal stock returns: The empirical power and specification of test
statistics. Journal of Financial Economics, 43, 341–372.
Barber, B. M., & Odean, T. (2002). All that glitters: The effect of attention and news on the buying behavior of individuals and
institutional investors. Davis, Mimeo: University of California.
Brammer, S. J., Brooks, C., & Pavelin, S. (2006). Corporate social performance and stock returns: UK evidence from disaggregate
measures. Financial Management, 35(3), 5–25.
Brammer, S. J., &Millington, A. I. (2005). Corporate reputation and philanthropy: An empirical analysis. Journal of Business Ethics,
61(1), 29–44.
Carroll, A. B. (1999). Corporate social responsibility – Evolution of a definitional construct. Business and Society, 38, 268–295.
Chung, S. Y., Eneroth, K., & Schneeweis, T. (2003). Corporate reputation and investment performance: The UK and US experience.
Research in International Business and Finance, 17, 273–291.
Cox, P., Brammer, S., & Millington, A. (2004). An empirical examination of institutional investor preferences for corporate social
performance. Journal of Business Ethics, 52, 27–43.
DeBondt,W. F. M., & Thaler, R. H. (1987). Further evidence on overreaction and stock market seasonality. Journal of Finance, 42,
557–581.
DeBondt,W. F. M., & Thaler, R. H. (1985). Does the stock market overreact? Journal of Finance, 40, 793–805.
Derwall, J., Gunster, N., Bauer, R., & Koedojk, K. (2004). “The Eco-Efficiency Premium Puzzle” Erasmus UniversityWorking Paper.
Fama, E. (1998). Market efficiency, long-term returns, and behavioral finance. Journal of Financial Economics, 49, 283–306.
Fama, E., & French, K. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33,
3–56.
Fama, E., & French, K. (1992). The cross-section of expected stock returns. Journal of Finance, 47, 427–465.
Fama, E., & MacBeth, J. (1973). Risk, return and equilibrium: Empirical tests. Journal of Political Economy, 81(3), 607–636.
Filbeck, G., Gorman, R., & Preece, D. (1997). Fortune’s most admired firms: An investor’s perspective. Studies in Economics and
Finance, 18, 74–93.
Filbeck, G., & Preece, D. (2003a). Announcement effects of the working mother annual survey of family-friendly firms. Journal
of Investing, 12(3), 87–95.
Filbeck, G., & Preece, D. (2003b). Fortune’s Best 100 Companies to work for in America: Do they work for shareholders? Journal
of Business Finance and Accounting, 30, 771–797.
Graves, S. B., & Waddock, S. A. (1994). Institutional owners and social performance. Academy of Management Journal, 37,
1034–1046.
Grossman, B., & Sharpe, W. (1986, (July–August)). Financial implications of South Africa divestment. Financial Analysts Journal,
15–29.
Hamilton, S., Jo, H., & Statman, M. (1993). Doing well while doing good? The investment performance of socially responsible
mutual funds. Financial Analysts Journal, 49, 62–66.
Jones, R., & Murrell, A. (2001). Signaling positive corporate social performance. Business and Society, 40, 59–78.
Loughran, T., & Ritter, J. R. (2000). Uniformly least powerful tests ofmarket efficiency. Journal of Financial Economics, 55, 361–389.
Lyon, J. D., Barber, B. M., & Tsai, C.-L. (1999). Improved methods for tests of long-run abnormal stock returns. Journal of Finance,
54(1), 165–201.
Maignan, I., & Ferrell, O. C. (2000). Measuring corporate citizenship in two countries: The case of the United States and France.
Journal of Business Ethics, 23, 283–297.
Matten, D.,&Crane,A. (2005). Corporate citizenship: Toward an extended theoretical conceptualization. Academy ofManagement
Review, 30(1), 166–179.
McLachlan, J., & Gardner, J. (2004). A comparison of socially responsible and conventional investors. Journal of Business Ethics,
52(1), 11–25.
Moskowitz, M. (1972). Choosing socially responsible stocks. Business and Society, 1, 71–75.
Rudd, A. (1981). Social responsibility and portfolio performance. California Management Review, 23(4), 55–61.
Scholtens, B. (2005). Style and performance of Dutch socially responsible investment funds. Journal of Investing, 14(1),
63–72.
Schroder,M. (2004). The performance of socially responsible investments: Investment funds and indices. Financial Markets and
Portfolio Management, 18(2), 122–142.
Statman, M. (2000). Socially responsible mutual funds. Financial Analysts Journal, 56, 30–39.
Statman, M. (2006). Socially responsible indexes:Composition, performance and tracking errors. Journal of Portfolio Management,
32(3), 100–109.
Vergin, R. C., & Qoronfleh, M. (1998). Corporate reputation and the stock market. Business Horizons, 41, 19–26.
Waddock, S. A., & Graves, S. B. (1999). Assessing the link between corporate governance and social/financial performance. In
International association for business and society conference proceedings
URI: http://wrap.warwick.ac.uk/id/eprint/36558

Request changes or add full text files to a record

Actions (login required)

View Item View Item

Document Downloads

More statistics for this item...