TY - JOUR
T1 - Reactive or proactive? Investor sentiment as a driver of corporate social responsibility
AU - Cheong, Calvin W.H.
AU - Sinnakkannu, Jothee
AU - Ramasamy, Sockalingam
PY - 2017/12
Y1 - 2017/12
N2 - Investors and financial markets have been a neglected stakeholder group in studies on a firm's motivations to be socially and environmentally responsible. Despite being a strong driving force behind firm value, no study has investigated the influence of market and investor sentiments on CSR behaviour. Using a global sample, we investigate the effects of market and investor sentiments on firm CSR performance. We find negative market and investor sentiments in the prior year motivate firms to improve their CSR performance in the next year. We also find the magnitude of improvement in CSR performance differs not only by country, but by CSR sub-category as well. These findings imply that a firm's motivation to improve its CSR performance is reactionary, rather than being driven by altruism. Regulators and proponents of CSR should thus seek to persuade investors and financial markets to put pressure on firms to further advance the CSR agenda.
AB - Investors and financial markets have been a neglected stakeholder group in studies on a firm's motivations to be socially and environmentally responsible. Despite being a strong driving force behind firm value, no study has investigated the influence of market and investor sentiments on CSR behaviour. Using a global sample, we investigate the effects of market and investor sentiments on firm CSR performance. We find negative market and investor sentiments in the prior year motivate firms to improve their CSR performance in the next year. We also find the magnitude of improvement in CSR performance differs not only by country, but by CSR sub-category as well. These findings imply that a firm's motivation to improve its CSR performance is reactionary, rather than being driven by altruism. Regulators and proponents of CSR should thus seek to persuade investors and financial markets to put pressure on firms to further advance the CSR agenda.
KW - Corporate social responsibility
KW - Country variation
KW - Investor sentiments
KW - Market sentiments
UR - http://www.scopus.com/inward/record.url?scp=85026327220&partnerID=8YFLogxK
U2 - 10.1016/j.ribaf.2017.07.002
DO - 10.1016/j.ribaf.2017.07.002
M3 - Article
AN - SCOPUS:85026327220
SN - 0275-5319
VL - 42
SP - 572
EP - 582
JO - Research in International Business and Finance
JF - Research in International Business and Finance
ER -