How firms respond to being rated

Chatterji, Aaron; Toffel, Michael W.

doi:10.1002/smj.840

Cited by 402 publications

(368 citation statements)

References 95 publications

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“…He states that an increasing reliance on independent, thirdparty constructed CSR measures is a method to reduce CSR-created market noise. Further, he notes that Chatterji and Toffel (2010) and Doh et al (2010) conclude that independent rating agencies are already reducing information asymmetry. Chatterji et al (2009) assess the Kinder, Lydenberg, Domini Research & Analytics (KLD) ratings to determine if they provide transparency, accurately capture past performance, and measure factors affecting future environmental performance.…”

Section: Csr Measurements Of Sustainabilitymentioning

confidence: 96%

Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality

Elayan

Liu

et al. 2014

J Bus Ethics

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We examine the equity valuation effect of press releases of upgrades or downgrades reflected in the Covalence Ethical Quote (CEQ), an index ranking the ethical performance of multinational firms. The index is updated quarterly and is comprehensive enough to include 45 criteria reflecting working conditions, impact of product, impact of production, and company institutional impact. Thus, it captures many dimensions of firms' ethical performance that are not accounted for in previous research. Our research encompasses a joint test of the value relevance of the index itself and the impact of ethical reputation on a firm's value. We find first a significant causal relationship between stock market reactions and changes in the CEQ. Specifically, disclosures of positive (negative) changes in firm ethical performance cause increases (decreases) in firm value. Second, cross-sectional analysis indicates a positive association between changes in firm ethical performance and both its financial performance and its financial reporting quality. Collectively, these results suggest that the CEQ conveys information that is useful to investors. Further, corporate measures taken to increase ethical performance are associated with positive benefits to shareholders. Finally, investors have concluded that good news about their firms' efforts to be ethical is worth the cost.

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Section: Csr Measurements Of Sustainabilitymentioning

confidence: 96%

Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality

Elayan

Liu

et al. 2014

J Bus Ethics

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“…Firms respond to the practice of rating (Chatterji and Toffel 2010). The DJSI is one of the top three sustainability ratings and has been recognized for having a positive impact on sustainability performance (RobecoSAM 2015b; Davies 2013; López et al 2007).…”

Section: Incorporating Anti-tax Avoidance Into Sustainability Frameworkmentioning

confidence: 98%

Tax Avoidance as a Sustainability Problem

2016

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This manuscript proposes that tax avoidance can be better understood and mitigated as a sustainability problem. Tax avoidance is not just a financial problem for tax authorities, but one that erodes critical common spaces necessary for the smooth functioning of regulatory compliance, organizational integrity, and society. Defining tax avoidance as a sustainability problem offers a broader and more holistic understanding of the organizational and societal consequences of tax avoidance behavior. Sustainability is also a mature and legitimized concept that can readily incorporate taxation. A variety of established sustainability metrics have the capacity to incorporate anti-tax avoidance measures or publicize firms that engage in fair tax practices. This manuscript concludes that integrating sustainability principles, in conjunction with important extant work on corporate social responsibility and taxation, can advance the goals of decreasing the occurrence and acceptability of tax avoidance.

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“…As it gains in stature and legitimacy, SRI is in a unique position to orient corporations toward corporate sustainability because firms that pass these screens can attract capital more easily (Ambec & Lanoie, 2008;Chatterji & Levine, 2006;Delmas & Blass, 2010;O'Rourke, 2003;Siegel, 2009). Consequently, as SRI becomes more prevalent, firms may strive to improve their environmental and social performance to be included in such indices (Chatterji & Toffel, 2010). Unsurprisingly perhaps, as SRI has grown it has led to a proliferation of ratings to assess corporate social responsibility and environmental performance.…”

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confidence: 99%

Triangulating Environmental Performance: What Do Corporate Social Responsibility Ratings Really Capture?

Delmas

Etzion

Nairn-Birch

2013

AMP

232

199

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The emergence of socially responsible investing has led to the development of a large number of methodologies for rating corporate social responsibility and to a growing body of research exploring the link between environmental and financial performance. Increased availability of information potentially generates an abundance of riches upon which to base investment decisions, but it also raises issues of commensurability, information overload, and confusion. Using a unique data set combining environmental ratings from three leading purveyors, we identify the principal components of corporate environmental performance. We find that two distinct factors-the environmental processes and practices implemented by firms, and the environmental outcomes they generate-explain 80% of the variance of the data. We also find corporate financial performance to be associated to process but not to outcome measures.

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How firms respond to being rated

Cited by 402 publications

References 95 publications

Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality

Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality

Tax Avoidance as a Sustainability Problem

Triangulating Environmental Performance: What Do Corporate Social Responsibility Ratings Really Capture?

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