The role of options markets in corporate social responsibility

Fengfei Li, Chen Lin, Tse-Chun Lin and Sichen Shen

Journal of Financial Markets, 2024, vol. 70, issue C

Abstract: We explore the relationship between options trading and corporate social responsibility (CSR). We find that options trading can enhance CSR by (i) fostering shareholder activism, as indicated by increased long-term and socially responsible institutional ownership and CSR proposals and (ii) intensifying product market competition, which spurs green innovation and product-related CSR initiatives. The positive effects are more pronounced in well-governed firms but diminished in firms with managerial entrenchment. Moreover, CSR improvements driven by options trading positively influence firm value, with notable enhancements in environmental performance. Our results underscore that options markets play a crucial role in promoting responsible corporate practices.

Keywords: Corporate social responsibility; CSR; Options trading; Shareholder activism; Corporate governance; Environmental performance; CSR investment (search for similar items in EconPapers)
JEL-codes: G12 G23 G34 M14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1386418124000284
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:70:y:2024:i:c:s1386418124000284

DOI: 10.1016/j.finmar.2024.100910

Access Statistics for this article

Journal of Financial Markets is currently edited by B. Lehmann, D. Seppi and A. Subrahmanyam

More articles in Journal of Financial Markets from Elsevier
Bibliographic data for series maintained by Catherine Liu ().