What Have Firms Been Doing? Exploring What KLD Data Report About Firms’ Corporate Social Performance in the Period 2000-2010

Abstract

With the blossoming of research on corporate social performance (CSP), the data produced by Kinder, Lydenberg, Domini (KLD) have become the standard to measure firms’ social and stakeholder actions. However, to date, only a few studies have focused on examining the data directly, and have done so largely in terms of validating the concepts and methods in the data set’s construction. The present study seeks to complement these efforts by contributing knowledge about what the KLD data report on firms’ actions toward primary and secondary stakeholders, and the dimensions of CSP that firms generally engage in, together or sequentially. With data on 3,073 firms over the period 2000-2010, results show that firms expend more resources on garnering strengths in primary stakeholder dimensions, although this trend is sharply deteriorating to the benefit of secondary stakeholders—notably the natural environment. Results also show that firms generally approach CSP with a mixed behavior, with strengths and concerns in the same dimensions, especially as it pertains to secondary stakeholders. These are the same dimensions in which firms show the longer, more intrinsic commitments, suggesting that secondary stakeholder strengths and concerns may be structural in nature. However, there is also evidence of relationships across dimensions, indicating that firms’ involvement in CSP can generate momentum. The rich implications of these findings are discussed.

Incumbent Stakeholder Management Performance and New Entry

“…Further, our interpretation of instrumental stakeholder theory suggests that when firms' aggregate SMP is imbalanced (i.e., tilts too much in favor of a small proportion of stakeholders), they are also likely to experience more entrepreneurial entries. Instrumental stakeholder theory also has significant links with the corporation social responsibility (CSR) and corporate social performance (CSP) literatures, which often use the same measures as stakeholder researchers (e.g., Brower and Dacin 2020;Hillman and Keim 2001;Perrault and Quinn 2018;Sun et al 2019). Many studies examining SMP (and CSP) use the KLD dataset (e.g., Brower and Dacin 2020;Luo et al 2015;Perrault and Quinn 2018;Wang and Choi 2013).…”

“…Instrumental stakeholder theory also has significant links with the corporation social responsibility (CSR) and corporate social performance (CSP) literatures, which often use the same measures as stakeholder researchers (e.g., Brower and Dacin 2020;Hillman and Keim 2001;Perrault and Quinn 2018;Sun et al 2019). Many studies examining SMP (and CSP) use the KLD dataset (e.g., Brower and Dacin 2020;Luo et al 2015;Perrault and Quinn 2018;Wang and Choi 2013). It covers large, medium and small-sized publicly traded U.S. firms and includes measures of community relations, workplace diversity, labor relations, environmental impact and product safety, and corporate governance, which are key indicators of stakeholder management.…”

Towards corporate transparency

“…Companies' sustainability disclosures and polices are in many instances reviewed by independent consultant firms that provide ratings and rankings, such as Kinder Lydenburg and Domini (KLD) (Perrault & Quinn, 2018), RobecoSAM (Stolowy & Paugam, 2018) and even auditing firms (Ackers, 2017). These firms' ratings are then used to constitute sustainability indices such as the Dow Jones Sustainability Index, the MSCI Global SRI Indexes, FTSE4Good Index and S&P 500 Environmental & Socially Responsible Index.…”

How Do Social Media Affect Analyst Stock Recommendations? Evidence from S&P 500 Electric Power Companies' Twitter Accounts

“…We use several variables that indicate alternative dimensions of nonfinancial performance. Specifically, we use KLD scores on three dimensions: Corporate Governance, Community, and Environment scores (Chatterji & Toffel, ; Flammer, ; Perrault & Quinn, ). We exclude firms with the highest KLD scores in terms of their Corporate Governance, Community, and Environment performance and examine whether our main findings still hold.…”