Asymmetric Information and Corporate Social Responsibility

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

82 Scopus Citations
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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)458-488
Journal / PublicationBusiness and Society
Volume55
Issue number3
Online published24 Mar 2015
Publication statusPublished - 1 Mar 2016
Externally publishedYes

Abstract

This article addresses the question whether companies benefit from their commitment to corporate social responsibility (CSR). The authors argue that firms which score high on CSR activities build investor confidence and find evidence that they benefit from lower information asymmetry. The authors measure information asymmetry by insider trading, which is defined as the trading of a company’s shares by corporate insiders who have an information advantage with the aim to reap gains or avoid losses. Using a sample of U.S. firms listed in the MSCI World Index during the period 2004 to 2013 and the firm- and industry-level CSR rating from Global Engagement Service (GES), the authors show that insider transactions in firms with a high score on CSR activities lead to lower abnormal returns. This investigation extends current literature on the business case for CSR by explaining the influence of CSR activities on asymmetric information.

Research Area(s)

  • asymmetric information, corporate social responsibility (CSR), financial markets, insider trading

Citation Format(s)

Asymmetric Information and Corporate Social Responsibility. / Lopatta, Kerstin; Buchholz, Frerich; Kaspereit, Thomas.
In: Business and Society, Vol. 55, No. 3, 01.03.2016, p. 458-488.

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review