Value-based Management

Journal of Business Ethics

, Volume 76, Issue 2, pp 189-206

What Corporate Social Responsibility Activities are Valued by the Market?

  • Ron BirdAffiliated withSchool of Finance and Economics, University of Technology
  • , Anthony D. HallAffiliated withSchool of Finance and Economics, University of Technology
  • , Francesco MomentèAffiliated withIAFC, Bocconi Univesity Email author 
  • , Francesco ReggianiAffiliated withIAFC, Bocconi Univesity

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Corporate management is torn between either focusing solely on the interests of stockholders (the neo-classical view) or taking into account the interests of a wide spectrum of stakeholders (the stakeholder theory view). Of course, there need be no conflict where taking the wider view is also consistent with maximising stockholder wealth. In this paper, we examine the extent to which a conflict actually exists by examining the relationship between a company’s positive (strengths) and negative (concerns) corporate social responsibility (CSR) activities and equity performance. In general, we find little evidence to suggest that managers taking a wider stakeholder perspective will jeopardise the interest of its stockholders. However, our findings do suggest that the market is not only influenced by the independent CSR activities, but also the totality of these activities and that the facets that they value do vary over time. It seems that␣most recently, the market has valued most firms that satisfied minimum requirements in the areas of diversity and environmental protection but were most proactive in the area of employee-relations.


corporate social responsibility corporate performance shareholder value value-based management