Corporate Social Responsibility Information on Stock Prices: Event study on Corporate Knights’ Global 100

Corporate social responsibility can be considered still as a black box when it comes to its implications on business outcomes. A vast body of literature has been built to examine the potential effects of corporate social responsibility initiatives and their effects on the financial performance and the risk level of companies, and the results have been unsystematic, showing correlations between everything from negative to positive. Due to corporate social responsibility’s ambiguous effects on business, the market reactions to information considering corporate social responsibility have been manifold. Since corporate social responsibility’s capabilities in adding investor value have been open to interpretation the market has not been able to react coherently to information considering it in the past. By studying how the stock market reacts to corporate social responsibility performance information, both the ambiguous relationships with financial performance and with stock market reactions could be further clarified, since the stock market reaction implicitly indicates how the market sees corporate social responsibility in affecting the company’s future performance. This study focused on the corporate social responsibility performance information produced by Corporate Knights with their annually disclosed Global 100 -list of 100 world’s most sustainable companies. The study was conducted as an event study, examining the abnormal returns created in the market around the event window of the publication of the Global 100. The abnormal returns were calculated using a market model and the abnormal returns were further analyzed cross-sectionally with a regression analysis. The results of the study showed a small but statistically insignificant positive response from the market during the event day. Therefore, it was concluded that the Global 100 -list has no value implications