corporate social responsibility, corporate performance, shareholder value, value-based management,

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We decompose broad-based measures of accruals into firm-specific and related-firm components. We find that the negative relation between accruals and future firm performance is almost entirely attributable to the firm-specific component. Standard risk-based explanations are hard to reconcile with this fact. To the extent expected returns have a common component spanning related firms, a risk-based explanation would suggest a stronger negative relation between accruals and future firm performance when related firms are also growing. Instead, the attenuation we document is more likely attributable to suboptimal investment decisions, which the stock market and analysts do not incorporate in a timely manner. AbstractWe decompose broad based measures of accruals into firm specific and related firm components. We find that the negative relation between accruals and future firm performance is almost entirely attributable to the firm specific component. Standard risk based explanations are hard to reconcile with this fact. To the extent expected returns have a common component spanning related firms, a risk based explanation would suggest a stronger negative relation between accruals and future firm performance when related firms are also growing. Instead, the attenuation we document is more likely attributable to sub-optimal investment decisions, which the stock market and analysts do not incorporate in a timely manner.JEL classification: G12; G14; M41

Information on the link between market performance and corporate social responsibility (CSR) activities provides an indication of the extent of acceptance by investors of these types of activities. The nature of this relationship is of critical importance for management trying to reconcile the demands of the company's shareholders with those of a much wider group of stakeholders and for investors pursuing a socially responsible investing strategy. Using an international database we investigate the extent to which expenditures on CSR activities are valued across market in six countries/regions. We find that CSR activities are highly valued by the investors in the European markets, where our findings clearly indicate that such activities lead to higher market valuations. In the US, Japan and Australia expenditures on CSR activities have a neutral impact on company valuation, which is still a good outcome for management who wish to incorporate into their decision process the objectives of a wide spectrum of stakeholders and for investors wishing to tilt their investments towards the more socially responsible companies.