2019
DOI: 10.1002/for.2600
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Forecasting price delay and future stock returns: The role of corporate social responsibility

Abstract: This paper investigates the role of corporate social responsibility (CSR) performance in forecasting companys' stock prices and future returns. The forecasting analysis identifies a negative association between CSR performance and proxies of price delay. The negative CSR–delay association is weak for state‐owned enterprises (SOEs) because of their politically oriented motivation of CSR activities, but significantly strong for non‐SOEs. Furthermore, we find that forecasting delayed firms is expected to have hig… Show more

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Cited by 23 publications
(10 citation statements)
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“…Higher customer satisfaction should increase loyalty, insulate the current market share from competitors, help to build a firm's reputation, open the opportunity for new sources of revenue and increase investor recognition, and anticipated future cash flows should increase, boosting firm value and stock returns [27,47,[74][75][76]. Previous research has presented the idea that customer satisfaction as an intangible asset works in achieving a sustainable competitive advantage.…”
Section: Discussionmentioning
confidence: 99%
“…Higher customer satisfaction should increase loyalty, insulate the current market share from competitors, help to build a firm's reputation, open the opportunity for new sources of revenue and increase investor recognition, and anticipated future cash flows should increase, boosting firm value and stock returns [27,47,[74][75][76]. Previous research has presented the idea that customer satisfaction as an intangible asset works in achieving a sustainable competitive advantage.…”
Section: Discussionmentioning
confidence: 99%
“…We also use several control variables to capture other firm‐level and CEO‐level factors that may influence firm value. For the firm‐level characteristics, we consider firm size ( SIZE ; McWilliams & Siegel, 2000), leverage ( LEV ; Jiao, 2010), market to book ratio ( MB ; Gong et al, 2018), R&D expenditure ( RD ; Tang et al, 2018; Samsul, Muhammadm, Chu, & Ugur, 2019), cash flow from operations ( CFO ; Gong & Ho, 2018), capital expenditure ( CAP ; Retrenko, Aime, Ridge, & Hill, 2016), the ratio of current assets to current liabilities ( SLACK ; Pan, Wang, & Weisbach, 2015), and advertising expense ( ADV ; McCarthy et al, 2017). For CEO characteristics, we consider the gender dummy ( GENDER ; Zhang, Zhu, & Ding, 2013), CEO age ( AGE ; Godos‐Diez, Fernandez‐Gago, & Martinez‐Campillo, 2011), CEO tenure ( TENURE ; Chin, Hambrick, & Trevino, 2013), and retire dummy ( RETIRE ; Manner, 2010).…”
Section: Methodsmentioning
confidence: 99%
“…To further investigate to what extent MA affects the CSR‐firm performance relationship, we separate CSR into MA‐associated components, which are measured as the fitted values of CSR explained by MA, and non‐MA‐associated components (Callen, Khan, & Lu, 2013; Gong, Ho, Lo, Karathanasopoulos, & Jiang, 2019). We find that only the MA‐associated component of CSR has a significantly positive effect on firm performance, suggesting that the CSR–firm performance relationship depends mainly on the factor of MA.…”
Section: Introductionmentioning
confidence: 99%
“…Higher information disclosure quality can improve market performance and boost a firm's financial indicators (Chu et al, 2019;Wang et al, 2019). In addition to being significantly and positively correlated with company performance (Jiao, 2011), information disclosure reduces leverage risk (Pan et al, 2015), market value deviation (Zhu et al, 2020), and stock price delay risk (Gong et al, 2019) and increases accounting conservatism (Shen et al, 2021) and stock liquidity (Schoenfeld, 2017). Barth et al (2017) decompose enterprise value into liquidity, capital costs, and expected future cash flow.…”
Section: Literature Reviewmentioning
confidence: 99%