This study formulates a two-factor empirical model under the intertemporal CAPM framework to evaluate the cross-sectional implications of socially responsible investments in the US equity market. Our results show that socially responsible investments have no asset pricing impact on the US market. We argue that this ‘no financial impact’ finding indicates that investors will not be disadvantaged financially by investing in socially responsible funds or corporations.

Theoretical studies suggest that, when determining the workplace safety level, CEOs face a trade-off between ex ante safety-improving expenditures and the expected losses due to ex post injury and illness occurrences. We examine whether firms with higher CEO inside debt holdings have safer workplaces. Using establishment-level employee workplace injury and illness data, we find that CEOs’ inside debt holdings are negatively associated with employee workplace injury and illness cases. This relationship is more pronounced if workers’ compensation premiums are more sensitive (...) to injury claims and for firms with more government business and less pronounced for firms with higher levels of secured debt. We provide some evidence that our main result stems from CEOs increasing safety investments. Our empirical results are shown to be robust under a batch of robustness tests and when considering potential endogeneity problems. Our findings suggest that CEOs with higher levels of inside debt holdings are more sensitive to wealth loss due to employee injury and illness, leading to a safer workplace. (shrink)

The literature is replete with articles emphasizing the importance of corporate social responsibility. However, few, if any, of these articles discuss the role of the consumer in achieving corporate social responsibility. It is the premise of the current paper that it may be difficult for corporate social responsibility to succeed without the assistance of consumers. That is, for corporate social responsibility to flourish, it needs to be accompanied by consumer social responsibility. This paper examines this proposition, makes the distinction between (...) consumer ethics and CnSR, and presents research in these two expanding areas of inquiry, examining literature which supports the role of CnSR in complementing corporate social responsibility. (shrink)

We study the relationship between corporate social performance and financial performance by comparing the portfolio returns of firms with changes in corporate social responsibility (CSR) intensity. Using an extensive US sample from the MSCI ESG database, we find that improvement in the overall CSR is generally value enhancing. The relationship varies with CSR dimensions. More importantly, the relationship shifts differently for various CSR dimensions during the crisis period when trust in the society is low and financial resource is limited. Improvement (...) in environment, human rights, and product characteristics shows higher financial returns during the financial crisis period, whereas the value enhancement of improvement in employee relations is more pronounced during the non-crisis period. (shrink)

This paper investigates the impact of negative screening on the investment universe as well as on financial performance. We come up with a novel identification process and as such depart from mainstream socially responsible investing literature by concentrating on individual firms’ conduct and by studying a much wider range of issues. Firstly, we study the size and financial performance of fourteen potentially controversial issues: abortion, adult entertainment, alcohol, animal testing, contraceptives, controversial weapons, fur, gambling, genetic engineering, meat, nuclear power, pork, (...) stem cells, and tobacco. We investigate an international sample of more than 1,600 stocks for more than twenty years. We then analyze the impact of applying negative screens to a market portfolio. Our findings suggest that the choice for negative screening strategies does matter for the size of the investment universe as well as for risk-adjusted return performance. Investing in controversial stocks in many cases results in additional risk-adjusted returns, whereas excluding them may reduce financial performance. These findings suggest that there are opportunity costs to negative screening. (shrink)

Firms in controversial industries such as tobacco, alcohol, gambling, weapon, and nuclear power suffer organizational legitimacy problems. These firms, therefore, adopt various strategies to acquire legitimacy. Drawing on institutional theory, we conceptualize the top management team gender diversity as a legitimacy-seeking strategy and examines how a firm’s belonging to a controversial sector affects TMT gender diversity. Based on a cross-country sample of 1542 firms operating in controversial industries from 34 countries and control sample with another set of 1542 similar-sized firms (...) from non-controversial industries, the empirical evidence shows that belonging to a controversial industry exerts a positive impact on TMT gender diversity. The effect of industry belonging on TMT gender diversity is positively moderated by institutional gender parity and a low level of corruption. It indicates that institutional factors act as emancipative forces that foster women's empowerment. Taken together, our results for moderating variables highlight the role of institutional characteristics in supporting women empowerment initiatives. (shrink)

Most research studying the corporate social performance –corporate financial performance link has utilized developed country samples. Also, this literature has generally focused on a wide variety of industries, ignoring the fact that certain sectors – such as controversial industries – have graver social and environmental issues. Hence, a gap exists in this tradition when it comes to emerging markets and controversial industries. This paper attempts to fill this void by providing preliminary evidence and insight on the matter. Based on an (...) exploration in six Latin American countries and five controversial industries, we find a negative bidirectional association between CSP and CFP. These results tend to contradict the mainstream conclusion of a positive bidirectional link, suggesting that institutional and market-level forces play a major role in shaping this relationship. (shrink)

Globally active companies are involved in the discursive construction of moral legitimacy. Establishing normative conformance is problematic given the plurality of norms and values worldwide, and is particularly difficult for companies operating in morally controversial industries. In this paper, we investigate how organizations publicly legitimize the trade of human tissue for private profit when this practice runs counter to deep-seated and widespread moral beliefs. To do so, we use inductive, qualitative methods to analyze the website discourse of three types of (...) organizations that trade in human tissue and are associated with different degrees of moral controversy with respect to tissue procurement and use. Our analysis reveals an object-oriented approach to moral legitimizing centered on the human tissue as a morally disputed good. We find that the website discourse translates human tissue into technology, constructs normative meaning around a dominant instrumental value associated with human-tissue-as-technology, and reproduces and stabilizes this meaning by six discursive mechanisms that amplify and anchor it. Moreover, the use of amplifying and anchoring discourse was greater in organizations associated with greater controversy. The results are consistent with an object-oriented sociality. (shrink)

Recent conceptualization of built‐in versus bolted‐on corporate social responsibility (CSR) initiatives has offered a much‐needed distinguishing framework to sophisticate our understanding of why different CSR initiatives yield varying corporate social performance (CSP) and associated recognition from stakeholders. One of the major roadblocks in conducting research on these two types of CSR initiatives is the absence of a valid and reliable measure. We address this void by developing a measure for bolted‐on versus built‐in CSR that relies on coding publicly available content. (...) Our measure of these two types of CSR initiatives tests favorably for both convergent and discriminant validity and inter‐rater reliability. Advancement of such a measurement instrument will positively contribute to CSR research, enabling scholars to better theorize the linkage between CSR and reputation, and other aspects of firm performance. (shrink)

Can mandated adoption of corporate social responsibility (CSR) improve firm value? Most CSR adoption is purely voluntary. However, governments regularly encourage CSR adoption with soft regulations that vary from simply endorsing and symbolically supporting CSR to requiring the adoption of specific practices. Governments have resisted fully mandating CSR because there is some concern universally that mandated CSR may reduce firm value. There is, however, no empirical clarity as to whether mandated CSR impedes or improves firm value. We address this uncertainty (...) by analyzing the effects of the mandated adoption of CSR that the government of India legislated in 2014. Drawing on a sample of 1,526 publicly traded firms and deploying a combinative analytical framework comprising an event study, regression discontinuity design, and a difference-in-differences technique, we conclude that India’s CSR mandate did, in fact, increase value for all firms bound by the mandate. This value-enhancing effect was greater for foreign firms relative to domestic firms. Our results refute previous research showing that India’s CSR mandate diminished firm value. (shrink)

This study investigates corporate social responsibility of sinful firms, which refer to ones that are operating in controversial industries, including the production and distribution of alcohol, tobacco, gambling, adult entertainment, firearm, military, and nuclear power. We attempt to answer two questions in this study: Do these sinful firms actively advertise their CSR engagements compared to non-sinful firms? And do their advertising efforts really yield increased financial performance? Positing that advertising not only can make sinful firms’ good deeds visible, but also (...) can highlight the contradiction between these firms’ stigma and their prosocial activities, we claim that sinful firms are likely to advertise their CSR engagement to overcome their stigmatized firm image, but these advertising activities will make the firms’ performance vulnerable by inducing skepticism from stakeholders. Using KLD database in conjunction with COMPUSTAT and Center for Research in Security Prices from 1991 to 2010, where 337 firms are involved in the controversial sinful industries, namely tobacco, alcohol, gaming, firearms, military, and nuclear power, we examine the effect of advertising spending of sinful firms’ CSR engagement on performance vulnerability, which is instantiated with idiosyncratic risk. The empirical results indicate that sinful firms increase their advertising expenditure when they engage in CSR programs, but these efforts for advertising CSR tend to increase idiosyncratic risk. This finding indicates that even though sinful firms can benefit from engaging in socially responsible initiatives, advertising their CSR efforts may backfire. (shrink)

Corporate social responsibility functions as a positive signal to stakeholders that a firm is a responsible corporate citizen. However, CSR is increasingly becoming an ambiguous signal of organizational goodwill because many companies engage in CSR purely out of self-interest, rather than genuine altruism. In this paper, we integrate attribution theory with signaling theory to explore how stakeholders react when they receive additional signals that contradict the company’s intended positive CSR signal. Specifically, we argue that morally questionable CEO ethics in the (...) media negatively influences stakeholders’ CSR motive attributions, which in turn results in increased cynicism that ultimately impacts CSR support intentions and behaviors. We find support for our hypotheses in a quasi-experimental study of stakeholder media exposure to different types of CEOs. Our findings demonstrate that stakeholders consider CEO ethics an important signal of CSR motives, and will shun the CSR initiatives of morally questionable CEOs. (shrink)

Business Ethics: A European Review, EarlyView.

It is a truism that some industries are controversial either because the processes employed or the resulting products, for instance, can potentially harm the well-being of people. The controversy that surrounds certain industries can sharply polarise public opinion and debate. In this article, we employ legitimacy theory and morality policy to show how one industry sector (the electronic gaming machine sector as part of the wider gambling industry) is subject to this reaction. We suggest that the difficulty in establishing legitimacy (...) surrounding CSR practices in this sector is related to morality policy, whereby ideology and personal values play important roles in dividing opinion. Thus, gambling is often framed as an activity that is morally and ethically problematic. To show how this can manifest, we examine the veracity of two state-funded studies in Australia used in the development of gambling policy and their subsequent adoption in academic research. We highlight methodological, analytical and reporting issues in these studies that normally should be identified by those using such findings. The significance is that when morality policy and conflict surrounding legitimacy are involved, then it can explain why adherence to normative research standards is potentially lowered. Our theoretical posture leads us to further speculate that the adoption and communication of CSR in electronic gambling will be contested by opponents of the industry. (shrink)

The literature on the interplay between geographic communities and organizations has largely ignored the role of individual residents. In adopting a meso-perspective, we examine a potentially vital relationship between corporate conduct and pro-social behavior demanding sacrifice from individuals. Drawing on Weber ), we theorize that organizations in a community legitimize personal social conduct in three ways—by serving as role models, imparting norms and values, and routinizing forms of interaction. We study the relationship between corporate social responsibility behavior by local firms (...) and the social distancing of citizens in US counties during the Covid-19 pandemic, a core ethical outcome. We argue and find that the residents of communities in which firms exhibit higher levels of CSR engaged in more SD during the Covid-19 pandemic. This was true when firms were long-established, isomorphic in their CSR, and major employers and vendors. Moreover, CSR relating to the treatment of employees as well as positive and negative extremes in CSR bore especially strong relationships with SD. Implications are drawn for the study of business ethics, as modeled by CSR, as a force for ethical personal behavior and public health in communities. (shrink)

Using a policy-capturing approach with a broad student sample we examine how individuals’ economic, social and environmental values influence their propensity to engage in a broad range of sustainability-related corporate actions. We employ a multi-dimensional sustainability framework of corporate actions and account for both the positive and negative impacts associated with corporate activity—termed strength and concern actions, respectively. Strong economic values were found to increase the propensity for concern actions and the willingness to work in controversial industries. Individuals with balanced (...) values were as likely as those with strong economic values to pursue positive economic outcomes, but without the same downside potential for concern actions. We also found significant gender effects, with females being less likely to engage in concern actions and more supportive of social and environmental strength actions. (shrink)

This paper examines how it is possible for firms in controversial sectors, which are often marked by social taboos and moral debates, to act in socially responsible ways, and whether a firm can be socially responsible if it produces products harmful to society or individuals. It contends that a utilitarian justification can be used to support the legal and regulated provision of goods and services in these areas, and the regulated and legal provision of these areas produces less harm than (...) the real alternative—illegal and unregulated supply. Utilitarianism is concerned as much with harm minimisation as good maximisation, and both are equally important when it comes to maximising welfare (Bentham 1789, 1970; Mill [1863] 1964). Any adequate theory of CSR must, therefore, have the capacity to handle a business that minimises harm as well as those that more straightforwardly maximise good. In this paper we therefore attempt two tasks. First, we argue that the legal but regulated provision of products and services may be better from an overall utilitarian perspective than a situation in which these harmful or immoral goods and services are illegal but procurable via a black market. Porter and Kramer’s (2006) strategic CSR framework is then presented to describe how firms in these controversial sectors can act in socially responsible ways. This model highlights the importance of firm strategy in selecting areas of socially responsible behaviours that can be acted upon by firms in each industry. (shrink)

To fight climate change, firms must adopt effective and feasible carbon management practices that promote collaboration within supply chains. Engaging suppliers and customers on carbon management reduces vulnerability to climate-related risks and increases resilience and adaptability in supply chains. Therefore, it is important to understand the motives and preconditions for pursuing supply chain engagement from companies that actively engage with supply chain members in carbon management. In this study, a relational view is applied to operationalize the supply chain engagement concept (...) to reflect the different levels of supplier and customer engagement. Based on a sample of 345 companies from the Carbon Disclosure Project’s supply chain program, the determinants of engagement were hypothesized and tested using multinomial and ordinal logistic estimation methods. The results indicate that companies that integrate climate change into their strategies and are involved in developing environmental public policy are driven by moral motives to engage their suppliers and customers in carbon management. All these factors make a stronger impact on supplier engagement than on customer engagement. Moreover, companies operating in greenhouse gas-intensive industries are driven by instrumental motives to engage their suppliers and customers because increasing greenhouse gas intensity positively influences engagement level. Company profitability appears to increase supplier engagement, but not customer engagement. Interestingly, operating in a country with stringent environmental regulations does not appear to influence supply chain engagement. By utilizing relational capabilities and collaboration, buyers can increase their suppliers’ engagement to disclose emissions, which ultimately will lead to better results in carbon management. (shrink)

This paper attempts to investigate how and why organisations in Macao’s gambling industry engage in corporate social responsibility. It is based on an in-depth investigation of Macao’s gambling industry with 49 semi-structured interviews, conducted in 2011. We found that firms within the industry were emphasising pragmatic legitimacy based on both economic and non-economic contributions, in order to project positive images of the industry, while glossing over two domains of adverse externalities: problem gambling among visitors, and the pollution and despoliation of (...) the environment. By engaging symbolically rather than substantively in CSR, the gambling firms were diverting attention away from issues of moral legitimacy, in order to be allowed to continue to pursue “business as usual” as a means of obtaining substantial financial returns in a social, cultural and socio-political context that was exerting relatively little public pressure to improve corporate social and environmental performance. We conjecture that the gambling firms were feeding on borrowed time. (shrink)

In this qualitative meta-analysis, I analyze corporate irresponsibility as an emergent organizational process. Organizations enacting irresponsible practices rely not only on a particular form of a process path, but on how this process path evolves within the organization. To achieve a better understanding of this process path, I conducted a qualitative meta-analysis drawn from 20 published cases of irresponsible organizations. I explore how and under which conditions irresponsible behavior of organizations arises, develops, and changes over time. The process path of (...) corporate irresponsibility relies on the interaction of multiple levels of analysis and its temporal occurrence, resulting in either path dependency or path creation. Based on the empirical findings of the evolving phenomena, this study focuses on three phases of corporate irresponsibility: institutionalization, problematization, and adaptation. The process of corporate irresponsibility can take two distinct paths, the reactive, and the proactive. This study contributes to the corporate irresponsibility literature by offering new insights into, first, a processual and more interactional approach to corporate irresponsibility that accounts for interdependencies on the different levels of each phase, and second, the self-reinforcing mechanisms and explanatory patterns of corporate irresponsibility leading to path dependency or path creation. (shrink)

In this paper, we examine the relation between corporate social responsibility (CSR) and firm risk in controversial industry sectors. We develop and test two competing hypotheses of risk reduction and window dressing. Employing an extensive U.S. sample during the 1991-2010 period from controversial industry firms, such as alcohol, tobacco, gambling, and others, we find that CSR engagement inversely affects firm risk after controlling for various firm characteristics. To deal with endogeneity issue, we adopt a system equation approach and difference regressions (...) and continue to find that CSR engagement of firms in controversial industry sectors negatively affects firm risk. To examine the premise that firm risk is more of an issue for controversial firms, we further examine the difference between non-controversial and controversial firm samples, and find that the effect of risk reduction through CSR engagement is more economically and statistically significant in controversial industry firms than in non-controversial industry firms. These findings support the risk-reduction hypothesis, but not the window-dressing hypothesis, and the notion that the top management of U.S. firms in controversial industries is, in general, risk averse and that their CSR engagement helps their risk management efforts. (shrink)

This study examines how the leading beverage company handles the strategic paradox between its core business and the social issue of obesity. A discursive analysis reveals how the organization does embrace a social goal related to obesity but not the paradoxical tension between this goal and its core business. The analysis further shows how the tension, along with the responsibility for the social goal, is projected outside the organization. This response is underpinned by the paradoxical constructions of consumers and the (...) concept of obesity in the organization’s communication. Based on these findings, I outline a new type of process for projection, one of the defensive mechanisms recognized in the literature. The findings increase our understanding of defensive responses to organizational paradoxes and help distinguish between different kinds of strategic paradoxes. They also highlight the need to further open up the complexity and multiplicity of strategic paradoxes related to corporate sustainability. (shrink)

This paper takes a critical perspective on corporate social responsibility and examines the ways in which an industry organization discursively manages the relationship between the industry and its stakeholders in a situation where the legitimacy of the industry is called into question. Drawing on the literature on organizational narcissism and sensemaking the paper develops the construct of narcissistic CSR orientation and empirically elaborates on three defensive rhetorical strategies through which the organization makes sense of the accountability and responsibility of the (...) industry for the negative societal effects of their business. The paper advances knowledge in the field of critical CSR by proposing a new framework for critically examining organization-stakeholder relationships and organizational responses to stakeholder demands in contexts where the interests of organizations are in conflict with the public good. (shrink)

We tested whether the impact of an organizational transgression on consumer sentiment differs depending on whether the organization is a nonprofit. Competing hypotheses were tested: that people expect higher ethical standards from a nonprofit than a commercial organization, and so having this expectation violated generates a harsher response and that a nonprofit’s reputation as a moral entity buffers it against the negative consequences of transgressions. In three experiments participants were told that an organization had engaged in fraud, exploitation of women, (...) or unethical labor practices. Consistent with the moral disillusionment hypothesis, decreases in consumer trust post-transgression were greater when the organization was described as nonprofit, an effect that was mediated by expectancy violations. This drop in trust then flowed through to consumer intentions and consumer word of mouth intentions. No support was found for the moral insurance hypothesis. Results confirm that nonprofits are penalized more harshly than commercial organizations when they breach consumer trust. (shrink)

In this article, we examine how firms design executive compensation in light of their risk environment. Prior literature shows that corporate environmental responsibility (CER) of a firm inversely affects firm risk. We argue that firms with better CER performance benefit from the reduced firm risk, and therefore are more likely to provide greater managerial risk‐taking incentives to encourage the risk‐averse managers to undertake risk‐increasing but positive net present value (NPV) investments. Consistent with our hypotheses, we find that a firm’s CER (...) rating is positively associated with its CEO risk‐taking incentives (vega) in the following year. We also document cross‐sectional variations in the CER‐vega relationship, that is, a weaker association in the controversial industries. This study contributes to the literature by investigating the role of CER on executive compensation design from the perspective of risk management. (shrink)

In this paper, we examine the relationship between the environmental practices and implied cost of equity. Using a comprehensive sample of 23,301 firm–year observations from 43 countries, we find that an improvement in environmental practices leads to reduction of the implied cost of equity. Further, the results are stronger in countries where country-level governance is weak. Our results indicate that most of the benefits come from the reduction of emission and unnecessary wastage of resources. Our results remain robust to alternative (...) specifications and endogeneity concerns. (shrink)

In this study we examine how a firm’s corporate philanthropic behavior may affect its subsequent acquisitions. Drawing upon stakeholder theory, we argue that firms may strategically use philanthropic donations to obtain support or approval from stakeholders so as to advance subsequent acquisitions, suggesting a positive relationship between corporate giving and corporate acquisitions in terms of both acquisition number and value. We further contend that stakeholders’ support for acquisitions would be even more critical for firms with negative or conservative attitudes to (...) external stakeholders. Therefore, it is expected that both negative media coverage and controversial industry sectors will strengthen the positive relationship between corporate giving and subsequent corporate acquisitions. Analyses of publicly listed manufacturing firms in China during 2004–2015 largely support our predictions. This study deepens our understanding about the drivers of corporate giving and highlights its role in corporate acquisitions. (shrink)

Being a controversial industry, oil companies turn to corporate social responsibility (CSR) as a means to obtain legitimacy. Adopting a case study methodology, this research examines the characteristics of CSR strategies and CSR communication tactics of six oil companies by analyzing their 2011–2012 web site content. We found that all six companies engaged in CSR activities addressing the needs of various stakeholders and had cross-sector partnerships. CSR information on these companies’ web sites was easily accessible, often involving the use of (...) multimedia technologies and sometimes social media platforms. Furthermore, to boost the credibility of their CSR messages, these companies utilized a variety of tactics, such as factual arguments and two-sided messages. In sum, this research unveils the interconnectedness among business strategy, CSR practices, and CSR communication in oil companies’ attempt to gain legitimacy in an environment of controversy. The article ends with a discussion of the theoretical and practical implications of the research findings. (shrink)

In this study, we examine the relation between corporate environmental responsibility and risk in U.S. public firms. We develop and test the risk-reduction, resource-constraint, and cross-industry variation hypotheses. Using an extensive U.S. sample during the 1991–2012 period, we find that for U.S. industries as a whole, CER engagement inversely affects firm risk after controlling for various firm characteristics. The result remains robust when we use firm fixed effect or an alternative measure of CER using principal component analysis or downside risk (...) measures. To address the concern of endogeneity bias, we use a system equations approach and dynamic system generalized methods of moment regressions, and continue to find that environmentally responsible firms experience lower risk. These findings support the risk-reduction hypothesis, but not the resource-constraint hypothesis, along with the notion that the top management in U.S. firms is generally risk averse and that their CER engagement facilitates their risk management efforts. Our cross-industry analysis further reveals that the inverse CER-risk association mainly comes from the manufacturing sector, whereas in the service sector, CER tends to increase firm risk. (shrink)

This study investigates the effects on organization’s financial performances of, first, the extent to which the organizations are involved in controversial business activities, and second, their level of social performance. These companies can be considered non-socially responsible given the harmful nature of the activities they are involved in. Managers of these companies may still have incentives to pursue socially responsible actions if they believe that engaging on those actions will help them to achieve legitimacy and improve investors’ perception about them. (...) We develop a comprehensive methodology to investigate these corporate social performance (CSP)-related effects in a complex but specific setting. To this end, we analyze a sample of 202 US firms for the period 2005–2008 using a novel method in this area: partial least squares. Our results indicate that, contrary to the general findings in prior literature, companies involved in controversial business activities which engage in CSP do not directly reduce the negative perception that stakeholders have about them. Instead, we found evidence of a positive mediation effect of CSP on financial market-based performance through innovation. (shrink)

Few industries have been pressured to develop corporate social responsibility standards and policies like oil and gas. This has translated into the creation of non-governmental organizations and branches of the oil and gas firms focused on CSR. However, given the intrinsic complex characteristics of this industry, its global reach, and the fact that its operations affect and involve a wide variety of stakeholders, CSR issues cannot be defined and implemented exclusively at the industry or firm levels, but require the participation (...) of other actors affected directly or indirectly by oil and gas activities. In this paper we argue, first, that oil and gas CSR issues are collectively constructed through meta-organizations, and, second, that the complexity and variety of CSR issues require companies to build industry-specific and non-industry-specific collective actions. Based on how oil and gas firms participate in this multi-level co-construction of CSR issues, we created a typology of meta-organizations as infra-sectoral, sectoral, cross-sectoral, and supra-sectoral meta-organizations. (shrink)

Considering the urgency of addressing grand challenges that affect human health and achieving the ambitious health targets set by the United Nations’ Sustainable Development Goals, the role of business in improving health has become critical. Yet, our systematic review of the business–health literature reveals that business research focuses primarily on occupational health and safety, health care organizations, and health regulations. To embrace the health externalities generated by business activities, we propose that future research should investigate the conditions under which business (...) articulates and participates in health challenges, engages in multilevel actions toward tackling health challenges, and improves health outcomes and its impact on the health of external stakeholders, including customers and local communities. We also urge business scholars to engage with the public health research community to increase impact. (shrink)

In our study, we examine the association between hedge fund activism and a target firm’s corporate social responsibility (CSR) activities and whether activists can promote socially responsible investments while upholding shareholders’ interests. Using different matched samples, we find a strong positive association between the target firm’s CSR in the year before it is targeted by activists and its probability of being targeted by a hedge fund. Classifying hedge fund activists into socially and non-socially responsible funds based on their objectives, we (...) find that both give similar level of consideration to a firm’s CSR activities when initiating campaigns. Similar to DesJardine and Durand (DesJardine and Durand, Strategic Management Journal 41:1054–1082, 2020), we demonstrate that hedge funds have, on average, a negative impact on target firms’ CSR in the years following the initial investments. Complementary to DesJardine and Durand (DesJardine and Durand, Strategic Management Journal 41:1054–1082, 2020), we compare the two types of hedge funds and find an asymmetric effect of the hedge funds’ campaigns. Socially responsible hedge fund campaigns are associated with a large _increase_ in their target’s CSR, whereas non-socially responsible hedge funds _decrease_ this measure in their target. Finally, we find that target firms exhibit a long-term improvement in future stock returns and profitability. These findings provide evidence that certain types of activists, such as socially responsible funds, promote both _stakeholder_ and _shareholders’_ long-term interests. (shrink)

Even though the link between perceived corporate social responsibility fit and corporate reputation has received much attention from scholars, this tradition has ignored that the underpinnings of this association vary depending on the particular characteristics of each industry under study. To delve into this matter, we investigate in the increasingly relevant context of controversial industries how PCSR-fit could enhance corporate reputation and which are the mediating mechanisms of this association. Our academic contribution is twofold. First, we find that controversial sectors (...) indeed can increase corporate reputation through CSR activities. However, we find that to achieve this goal, the nature of PCSR-fit should be different than what extant literature indicates, because companies in these settings should directly focus on avoiding or reducing their inherent controversial harm or impact. Second, we evidence that “CSR initiatives' legitimacy” and “situational skepticism” mediate the PCSR-fit and corporate reputation relationship in CIs. Therefore, we further unravel the underpinnings of this association to advance what we know on the matter and aid practitioners in this particular context. (shrink)

The aim of this paper is to investigate the relationship between environmental, social, and governance controversies and firm market value. We use a unique dataset of more than 4000 firms from 58 countries during 2002–2011. Primary analysis surprisingly shows that ESG controversies are associated with greater firm value. However, when interacted with the corporate social performance score, ESG controversies are found to have no direct effect on firm value while the interaction appears to be highly and significantly positive. Building on (...) this evidence, we attempt to explore the channels through which CSP may enhance market value. Conducting sample split analysis indicates that higher CSP score has an impact on market value only for high-attention firms, those firms which are larger, perform better, located in countries with greater press freedom, more searched on the Internet, more followed by analysts, and have an improved corporate social reputation. Thus, our findings provide new insights on the role of firm visibility through which firms can profit from their CSP. (shrink)