Social responsibility

Stock price

Engineering

Stock (firearms)

Biology

Public relations

Literature

Portfolio

Accounting

Economics

Enterprise value

Computer science

Business

Corporate governance

Paleontology

Mechanical engineering

Political science

Monetary economics

Value (mathematics)

Corporate social responsibility

Socially responsible investing

Series (stratigraphy)

Financial economics

Finance

Revelation

Machine learning

Management Science

We classify institutions into socially responsible investors (SRI) and not socially responsible investors using the value weighted corporate social responsibility (CSR) scores of their portfolio holdings. We find that firms that exhibit increases in SRI ownership tend to increase future CSR scores. Our analysis of stock price responses to the revelation of SRI ownership changes indicates that the revelation of higher SRI ownership is associated with negative stock returns. These effects are particularly strong when we focus on SRI-activists, who tend to target firms with low CSR scores and lobby to increase them over time. These observations are consistent with the hypothesis that anticipated increases in CSR activities reduce firm values. This paper was accepted by David Simchi-Levi, finance.

Investor Tastes, Corporate Behavior, and Stock Returns: An Analysis of Corporate Social Responsibility