Institutional Reforms and Investor Reactions to CSR Announcements: Evidence from an Emerging Economy

24 Pages Posted: 13 Oct 2009

See all articles by Bindu Arya

Bindu Arya

University of Missouri at Saint Louis - College of Business Administration

Gaiyan Zhang

University of Missouri at Saint Louis - College of Business Administration

Abstract

This study contributes to the limited established empirical research on the impact and relevance of corporate social responsibility (CSR) in the capital markets of emerging economies. We conducted an event study to demonstrate how the timing of CSR announcements by firms that have aligned their strategies to newly instituted social regulations in South Africa influenced stock prices. Using a unique dataset of publicly listed South African enterprises that undertook CSR initiatives during the ten year period from 1996 to 2005, we found that investor reactions to CSR announcements concluded during the late phase of institutional reforms are viewed positively by investors. Furthermore, CSR announcements of substantive monetary value result in significantly higher shareholder returns.

Suggested Citation

Arya, Bindu and Zhang, Gaiyan, Institutional Reforms and Investor Reactions to CSR Announcements: Evidence from an Emerging Economy. Journal of Management Studies, Vol. 46, Issue 7, pp. 1089-1112, November 2009, Available at SSRN: https://ssrn.com/abstract=1486885 or http://dx.doi.org/10.1111/j.1467-6486.2009.00836.x

Bindu Arya (Contact Author)

University of Missouri at Saint Louis - College of Business Administration ( email )

One University Blvd.
487 SSB
St. Louis, MO 63121
United States

Gaiyan Zhang

University of Missouri at Saint Louis - College of Business Administration ( email )

One University Blvd.
487 SSB
St. Louis, MO 63121
United States

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