Investor Reactions to Concurrent Positive and Negative Stakeholder News

Groening, Christopher; Kanuri, Vamsi K.

doi:10.1007/s10551-016-3065-2

Cited by 40 publications

(45 citation statements)

References 102 publications

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“…This study contributes to the strategic consideration of corporate philanthropy in that it is a novel approach in CSR research. When undertaking corporate philanthropy, therefore, companies should take into account that their actions not only affect the community towards which their actions are directed but will also be assessed by investors, who value transparency and might associate greater concern for the community with a greater commitment to all other stakeholders, including shareholders (Groening & Kanuri, ). Social actions and assurance mechanisms indicate that firms take into account and aim to meet the expectations and demands of stakeholders and society.…”

Section: Discussionmentioning

confidence: 99%

“…In our research, we consider different ways of managing corporate philanthropy and assure it as a signal (Connelly et al, ; Groening & Kanuri, ; Haski‐Leventhal & Foot, ; Moratis, ). These signals convey the ideas of transparency, professionalism, best practices, good governance, and consistency (Siddique & Sciulli, ).…”

Section: Literature Review and Study Hypothesesmentioning

confidence: 99%

“…In this respect, sector can be a factor that can influence the management of corporate philanthropy and how it is perceived by stakeholders, thereby affecting its market value (Groening & Kanuri, ; Luffarelli & Awaysheh, ). Therefore, sector can moderate the relationship between the company's corporate philanthropy and its financial performance.…”

Section: Literature Review and Study Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

Arco-Castro

Pérez

Pérez-López

et al. 2020

Business Ethics: A Eur Rev

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Corporate philanthropy strategy integrated into the core business constitutes a novel vision and a little‐explored field of study with regard to corporate social commitment. The goal of this study is to analyse how the diverse ways of managing and assuring philanthropy can be considered signals of a firm's social commitment and consequently affect its market value. In addition, the analysis considers whether the business sector moderates those relationships. We aim to provide a comprehensive vision of corporate philanthropy and its effect on market value. From a sample of 965 firm‐years, of 193 firms from 2011 to 2015, we found that the market responds positively to the professional, independent management of philanthropy via a foundation, in preference to donations, and welcomes external assurance of corporate philanthropy as a set of actions that improve the perceived reliability of philanthropic activities. In addition, we observe a moderating effect of the business sector on the relationships among corporate philanthropy, assurance and the company's market value. The main contribution of this study is the provision of new evidence of how corporate philanthropy and its assurance are effective signals that reduce the information asymmetries between firms and investors, affecting company market value positively.

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Section: Discussionmentioning

confidence: 99%

Section: Literature Review and Study Hypothesesmentioning

confidence: 99%

Section: Literature Review and Study Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

Arco-Castro

Pérez

Pérez-López

et al. 2020

Business Ethics: A Eur Rev

View full text Add to dashboard Cite

show abstract

“…How investors may develop these perceptions has yet to be explained. While studies have examined performance implications of specific CSI events and the contextual factors that affect firm outcomes of CSI (e.g., Godfrey, Merrill, & Hansen, 2009; Groening & Kanuri 2018; Hamilton, 1995; Kang et al, 2016; Kashmiri, Nicol, & Hsu, 2017), internal organizational features such as the composition of a firm's senior leadership that may govern how investors react to CSI has received limited scholarly attention.…”

Section: Introductionmentioning

confidence: 99%

Firms behaving badly? Investor reactions to corporate social irresponsibility

Kanuri

Houston

Andrews

2020

Business and Society Review

Self Cite

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Corporate social irresponsibility (CSI) and other questionable business incidents that appear to harm stakeholders frequently afflict firms yet draw disparate investor reactions. We address this disparity by investigating the association between firm legal orientation and investor reactions to CSI. We hypothesize the proportion of board members and top management team (TMT) executives with law degrees affects investor perceptions of firm foresight, and in turn, their judgment of blame and consequent punishment. Based on abnormal returns to 629 announcements of CSI and 308 publicly traded S&P 500 firms, we find that both too small and too large a proportion of board of directors and TMT members with law degrees lead investors to mete out harsher punishment. This inverted u‐shaped link is further affected by firm size, firm risk, and industry competition. Our investigation sheds light on the link between executive education and financial performance in the context of CSI and investor perceptions of foresight.

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“…We show that, by reducing the amount of information asymmetry between firms and the market, institutionalized third parties can enable rewards and punishments from SR and SI actions, respectively. We also build on and add to previous research (Becchetti et al ., ; Cheung, ; Consolandi et al ., ; Groening and Kanuri, in press) by theorizing and demonstrating that the valence and content of indirect CSP signals provide essential information to the market and thus, can considerably impact firm value. We argue that the valence of indirect CSP signals reduces information asymmetries about the quality of a firm's overall CSP strategy, whereas the content of indirect CSP signals reduces information asymmetries about the level of a firm's CSP in a specific domain.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Indirect Corporate Social Performance Signals on Firm Value: Evidence from an Event Study

Luffarelli

Awaysheh

2018

Corp Soc Responsibility Env

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Prior research shows that signals sent by institutionalized third parties (i.e. indirect signals) about firms' corporate social performance (CSP) can impact firm value. However, the effects that different types of indirect CSP signals have on firm value have remained largely unexplored. Furthermore, managers often do not fully understand how to communicate CSP effectively. In this article, we operationalize CSP as a multidimensional construct and draw on signalling theory to examine how different types of indirect CSP signals impact firm value. The results of an event study show that institutionalized third parties can play an important role in delivering credible CSP‐related information to the market. Results also demonstrate that the valence (positivity vs. negativity) and content (the specific social domain) of indirect CSP signals are important predictors of the magnitude of market reactions, and that shareholders' responses to the valence and content of indirect CSP signals have substantially changed over time. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

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Investor Reactions to Concurrent Positive and Negative Stakeholder News

Cited by 40 publications

References 102 publications

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

How market value relates to corporate philanthropy and its assurance. The moderating effect of the business sector

Firms behaving badly? Investor reactions to corporate social irresponsibility

The Impact of Indirect Corporate Social Performance Signals on Firm Value: Evidence from an Event Study

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