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

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6486.2009.00836.x Byline: Bindu Arya (1), Gaiyan Zhang (1) Abstract: 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. Author Affiliation: (1)University of Missouri-St Louis Article note: Bindu Arya, 1003 SSB Tower, College of Business Administration, University of Missouri-St Louis, One University Boulevard, St Louis, MO 63121, USA (bindua@umsl.edu).