The impact of corporate social responsibility on stock returns: Evidence from the U.S. stock market

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Corporate social responsibility, often abbreviated “CSR,” is a company’s practices and initiatives to take responsibility for the benefit of society. The purpose of this study is to examine the impact of corporate social responsibility on the stock returns of U.S. publicly-traded companies that constitute S&P Composite 1500 Index, based on the stock performances during 2000-2014. Following a disaggregate measure as well as conducting cross-sectional one-year lagged regression analyses, the study assesses the effect of three corporate social responsibility indicators from the KLD STATS database, including: (1) Environmental Performance; (2) Corporate Governance Performance; and (3) Social Performance indicators. All three variables are compared with an aggregated CSR rating score, measured as the KLD indicator. This analysis indicates a significant negative correlation between the overall aggregated CSR rating score and stock returns. Corporate Governance is the only indicator found to be statistically significant and inversely correlated with stock returns. Environmental performance has a stronger, though statistically non-significant, negative impact on stock returns compared to Social and Corporate Governance performance scores. Based on four cross-sectional models, the analyses in this study indicate that taking the CSR initiatives will in fact have negative effect on the stock performance as well as the development of the company.


Business/Education and Human Ecology/Speech and Hearing Science (The Ohio State University Denman Undergraduate Research Forum)


Corporate Social Responsibility (CSR), Stock Return, S&P Composite 1500 Index