The Stock Performance of America's 100 Best Corporate Citizens

Stephen Brammer, Chris Brooks and Stephen Pavelin (s.pavelin@reading.ac.uk)
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Stephen Brammer: University of Bath
Stephen Pavelin: Economics - Business School - University of Reading

ICMA Centre Discussion Papers in Finance from Henley Business School, University of Reading

Abstract: This study considers 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 can provide considerable positive abnormal returns to investors, even after allowing for their market capitalisation, price-to-book ratios, and sectoral classification.

Keywords: Corporate citzenship; business ethics 100 best corporate citzens; corporate social responsibility; stock returns; trading rule performance (search for similar items in EconPapers)
JEL-codes: G10 G15 M14 M20 (search for similar items in EconPapers)
Pages: 38 Pages
Date: 2006-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The stock performance of America's 100 Best Corporate Citizens (2009)
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