scholarly journals Market reactions to CSR news in different industries

2020 ◽  
Vol 25 (2) ◽  
pp. 243-261
Author(s):  
Andrea Pérez ◽  
María del Mar García de los Salmones ◽  
Carlos López-Gutiérrez
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Media Coverage ◽  
Market Value ◽  
Market Reactions ◽  
Content Type ◽  
Goods And Services ◽  
The Media ◽  
Stock Market Reactions ◽  
Corporate Social

PurposeBased on the premises of the institutional theory, in this paper, we explore the effects that the media coverage of positive and negative Corporate Social Responsibility (CSR) news have on the stock market value of companies in diverse industries.Design/methodology/approachUsing a sample of 195 online articles published in the most important Spanish business newspaper, we implement an event study and a regression analysis.FindingsThe findings show that positive and negative CSR news, usually, have significant impacts on the stock market value of companies. Specifically, the market reaction is stronger under the announcement of negative news in all industries (i.e. basic, energy, finance and goods and services), although positive news also cause significant positive stock market reactions in the finance and basic industries.Originality/valueAlthough the media plays an indispensable role in the dialogue around CSR, much of the research focused on the role of the media on the CSR-CFP link does not consider how the industry variable can affect the abnormal stock returns derived from CSR news. This research contributes to this gap in the literature by exploring the differences that exist in the stock market reactions to CSR news based on the industry in which the companies operate.

The effect of corporate social responsibility (CSR) on shareholder value: evidence from the 9/11 terrorist attack

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Viput Ongsakul ◽  
Pornsit Jiraporn ◽  
Shenghui Tong ◽  
Sirimon Treepongkaruna
Keyword(s):  
Corporate Social Responsibility ◽  
Stock Market ◽  
Social Responsibility ◽  
Risk Mitigation ◽  
Terrorist Attack ◽  
Market Reactions ◽  
Content Type ◽  
Stock Market Reactions ◽  
Corporate Social ◽  
Negative Shock

Purpose This paper aims to explore the effect of corporate social responsibility (CSR) on shareholder value using the stock market reactions to a terrorist attack. This paper exploits the September 11 terrorist attack as an unanticipated exogenous shock that reduced shareholder wealth suddenly and unexpectedly. Based on the risk-mitigation hypothesis, the argument is that more socially responsible firms should suffer less negative market reactions. Design/methodology/approach This paper uses the standard event study methodology to estimate the stock market reactions to the 9/11 terrorist attack. Then, the study executes a cross-section analysis to determine whether CSR offers any protection in the presence of a sudden negative shock. Additional analysis includes propensity score matching, instrumental-variable analysis and using Oster’s (2019) method for testing coefficient stability. Findings The results show that the negative stock market reactions to the shock are significantly alleviated for firms with strong social responsibility. A rise in CSR by one standard deviation improves the market reactions by 22.56% of the average decline. This is consistent with the prediction of the risk mitigation hypothesis, where CSR spawns moral capital or goodwill that functions as an insurance-like defense in case of an adverse event. Research limitations/implications The study focuses on short-term market reactions because this method is more likely to show a causal effect. Future research may investigate long-term effects. Originality/value While prior research has investigated the effect of CSR on firm value, it has been challenging to establish causality. The approach is more likely to show causality as it is based on a sudden and unanticipated negative shock. This paper also uses several methods to reduce endogeneity, making it more likely that the results show causality, rather than merely an association.

Big is beautiful: the information content of bank rating changes

2015 ◽  
Vol 16 (3) ◽  
pp. 233-252 ◽  
Author(s):  
Christian Fieberg ◽  
Finn Marten Körner ◽  
Jörg Prokop ◽  
Armin Varmaz
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Information Content ◽  
Abnormal Returns ◽  
Too Big To Fail ◽  
Market Reactions ◽  
Content Type ◽  
Small Banks ◽  
Rating Changes ◽  
Stock Market Reactions

Purpose – The purpose of this paper is to study the information content of about 3,300 global bank rating changes before and after the Lehman bankruptcy in September 2008 to assess if differences in stock market reactions for small and big banks emerge. Design/methodology/approach – The analysis of the stock market reactions of rating changes (upgrades and downgrades) and bank’s size (small and big) is conducted by an event study approach. Findings – The authors find that while upgrades are not associated with significant abnormal bank stock returns, downgrades have a significantly negative effect. This result holds for both small and big banks, while negative abnormal returns are considerably stronger for the former. For small banks, the authors observe an increase in negative cumulative abnormal returns post-Lehman. The lack of a reaction to large banks’ rating downgrades in the narrow [−1,+1] event window indicates that their stock prices may, to some extent, be insulated from negative rating information even post-Lehman, which the authors attribute to an implicit “too big to fail” subsidy anticipated by equity investors. Originality/value – This paper provides insights to the differences in the information content of changes in small and big banks’ credit rating on stock returns that is unrelated to the well-known size effect. Compared to small banks, big banks seem to some extent be insulated from negative rating changes even post-Lehman – contributing to the on-going too big to fail debate.

scholarly journals Do all CSR news affect market value equally?

2019 ◽  
Vol 16 (8) ◽  
pp. 1107-1123
Author(s):  
Andrea Pérez ◽  
Carlos López-Gutiérrez ◽  
María del Mar García de los Salmones
Keyword(s):  
Media Coverage ◽  
Design Methodology ◽  
Abnormal Returns ◽  
Market Value ◽  
Market Reactions ◽  
Content Type ◽  
Different Types ◽  
Corporate Social ◽  
The Impact ◽  
Managerial Perspective

Purpose The purpose of this study explores the effects that media coverage of corporate social responsibility (CSR) news related to primary stakeholders (e.g. customers, employees and investors) and secondary stakeholders (e.g. community) have on the market value of companies, measured as the impact generated in the positive and negative abnormal returns for those companies. Design/methodology/approach Using a sample of 195 online papers published in the most important Spanish business newspaper during 2015, the authors implement an event study and a regression analysis that confirm the importance of CSR news for corporate financial goals. Findings The findings show that negative CSR news related to primary stakeholders such as investors and customers generate significant abnormal returns for companies that are notably larger than the abnormal returns generated by secondary stakeholders (e.g. community). Similarly, positive news related to primary stakeholders such as employees are the only positive news that affect market reactions significantly. Originality/value The study provides an empirical analysis that clarifies how media coverage of different types of CSR news affect the market value of companies. In doing so, the paper contributes to previous literature significantly because scant research exists that has compared the differential effects of CSR news focused on primary and secondary stakeholders. The findings are discussed under the premises of the managerial perspective of stakeholder theory.

Value creation through expanding the online distribution channel

2020 ◽  
Vol 120 (4) ◽  
pp. 714-729
Author(s):  
Frank Wiengarten ◽  
Hugo K.S. Lam ◽  
Di Fan
Keyword(s):  
Supply Chain ◽  
Stock Market ◽  
Value Creation ◽  
Distribution Channel ◽  
Chain Process ◽  
Market Reactions ◽  
Content Type ◽  
Creation Process ◽  
Stock Market Reactions ◽  
Value Creation Process

PurposeCurrent literature provides limited insights into the supply chain contexts within which e-commerce can create higher value for firms. To address this literature gap, this research explores the value potential, and thus value creation process, of e-commerce initiatives for supply chain distribution channel expansions.Design/methodology/approachUsing secondary data collected from multiple sources, this research conducted an event study to examine the stock market reactions to the announcements of e-commerce initiatives of Chinese firms.FindingsThe results indicate that the e-commerce initiatives increase average firm value by CNY 295.29 million in a three-day window around the initiative's announcement date. Moreover, we find that such stock market reactions are more positive for firms with poor operating performance, and more negative when firms deploy initiatives on their own (rather than third-party) platforms. Further, companies that integrate or complement their online sales with an offline sales channel experience more positive stock market reactions.Originality/valueThis study provides new insights into the value creation process of e-commerce from an operation and supply chain process perspective.

Stock market reactions to layoff announcements – analysis of the renewable energy sector

2017 ◽  
Vol 11 (2) ◽  
pp. 311-328 ◽  
Author(s):  
Stephan Kunert ◽  
Dirk Schiereck ◽  
Christopher Welkoborsky
Keyword(s):  
Renewable Energy ◽  
Stock Market ◽  
Capital Market ◽  
Abnormal Returns ◽  
Shareholder Wealth ◽  
Energy Sector ◽  
Market Reactions ◽  
Content Type ◽  
The Public ◽  
Stock Market Reactions

Purpose This study aims to analyze stock market reactions to layoff announcements in the renewable energy sector. The global renewable energy sector and most of the producers of wind and solar energy equipment are struggling. While changes in the regulation and in the promotion of energy production from renewable sources reduced the attractiveness of these technologies, many involved companies had to downsized their workforce to increase performance. The public often perceives these announcements as a way of increasing shareholder wealth at the cost of the employees. Support for this claim is often given in the form of isolated case study considerations. However, the case may be different for the renewable energy sector as changes in the overall institutional environment have sustainably deteriorated the prospects of this industry. Design/methodology/approach This study analyses stock market reactions of 65 layoff announcements made by companies in the renewable energy industry in the years from 2005 to 2014. The reactions are measured by cumulative abnormal returns, which are obtained by using the event study methodology. Findings It shows a significantly negative market reaction to the announcement of a layoff plan on the event day. The findings are generally in line with our expectations and underline the negative perspectives of the sector from a capital market point of view and the declining importance of the sector with respect to employment numbers. Originality/value The results of this study are important for investors when estimating the capital market reactions to layoff announcements and when they form their own expectations regarding possible future layoff announcements. For the public, the results are of interest as the prejudice, that layoff plans are used to increase shareholder wealth, can be dismantled. The opposite is shown.

The effect of earnings management on shareholder value and the role of board gender diversity

2020 ◽  
Vol 32 (3) ◽  
pp. 323-334
Author(s):  
Viput Ongsakul ◽  
Pornsit Jiraporn ◽  
Young Sang Kim
Keyword(s):  
Stock Market ◽  
Earnings Management ◽  
Terrorist Attack ◽  
Gender Diversity ◽  
September 11 ◽  
Shareholder Wealth ◽  
Market Reactions ◽  
Content Type ◽  
Board Gender Diversity ◽  
Stock Market Reactions

Purpose This study aims to investigate whether shareholders are convinced by earnings management. This study also explores how board gender diversity (the presence of female directors on the board) may influence the extent to which shareholders are convinced by earnings management. Design/methodology/approach The authors estimate the stock market reactions to the September 11 terrorist attack using the standard event study methodology. The authors then run a cross-sectional analysis to investigate whether the market reactions are influenced by the extent of earnings management. Furthermore, the authors test how board gender diversity affects the degree to which earnings management influences the stock market reactions. Findings The study results show that the market reactions to the attack are substantially mitigated for firms that exercise more upward discretionary accruals, implying that earnings management is successful in convincing shareholders. Additional analysis corroborates the results, including propensity score matching, instrumental variable analysis and using Oster’s (2019) method for testing coefficient stability. Crucially, the authors find that board gender diversity helps shareholders see through earnings management better. The presence of female directors significantly weakens the extent to which shareholders are persuaded by earnings management. Originality/value This study is the first to explore the effect of earnings management on shareholder wealth using the September 11 terrorist attack. The research design is less vulnerable to endogeneity and is thus much more likely to show a causal effect of accounting accruals on shareholder wealth.

Emphasis on Pro Forma versus GAAP Earnings in Quarterly Press Releases: Determinants, SEC Intervention, and Market Reactions

2005 ◽  
Vol 80 (4) ◽  
pp. 1011-1038 ◽  
Author(s):  
Robert M. Bowen ◽  
Angela K. Davis ◽  
Dawn A. Matsumoto
Keyword(s):  
Stock Market ◽  
Media Coverage ◽  
Press Release ◽  
Significant Shift ◽  
Press Releases ◽  
Market Reactions ◽  
Pro Forma Earnings ◽  
Stock Market Reactions ◽  
Earnings Press Releases ◽  
Pro Forma

Earnings press releases provide managers a forum to present their firm's quarterly financial information and perhaps influence perceptions of the firm's stakeholders. We explore the use of managerial emphasis as a disclosure tool and contribute to the debate over pro forma earnings. We examine (1) the determinants of emphasis placed on pro forma and GAAP earnings within quarterly earnings press releases, (2) whether there has been a shift away from emphasizing pro forma earnings toward GAAP earnings, and (3) whether stock market reactions to earnings news were influenced by emphasis placed on metrics within the press release. We find that firms emphasize metrics that are more value-relevant and portray more favorable firm performance. We also find that the extent of a firm's media coverage affects managers' emphasis decisions. Further, our results indicate a highly significant shift toward GAAP emphasis and away from pro forma emphasis in 2002 relative to 2001. Finally, our stock market tests suggest that greater emphasis on an earnings metric results in a stronger market reaction to the surprise in that metric. Overall, these findings are consistent with managers using emphasis in the earnings press release as a disclosure tool and this emphasis influencing at least one important stakeholder group—investors.

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