We conduct an experiment to examine investment professionals’ use of corporate social responsibility (CSR) disclosures when making personal investment decisions or investment recommendations to clients. We predict and find that investment professionals are more willing to personally invest and recommend investment to a client when a firm discloses positive CSR performance than when it makes [...]
Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. [...]
While research has shown that good stakeholder relations increase the value of a firm, less is known about how specific types of stakeholder governance affect firm value. We examine the value of one such governance mechanism — community benefits agreements (CBAs) signed by firms and local communities — intended to minimize social conflict that disrupts [...]
Investment professionals are becoming more and more interested in understanding how environmental, social and governance matters affect businesses. So PWC asked them to talk candidly and in some depth about how they use ESG information, how well they think companies do in communicating it, whether it is growing in importance and where the gaps are [...]
I examine the influence of sell-side financial analysts on corporate social responsibility (CSR), and find that firms with greater analyst coverage tend to be less socially responsible. To establish causality, I employ a difference-in-differences (DiD) technique, using brokerage closures and mergers as exogenous shocks to analyst coverage, as well as an instrumental variables approach. Both [...]
Non-financial-information must be as reliable as its financial counterpart for investors to make informed decisions, according to ICAEW. The latest report published by the body, The journey milestone 4: materiality in assuring narrative reporting, highlights the importance of assurance of non-financial information and shares tips on how to establish what is relevant. Assurance providers are [...]
This paper examines the link between gender diversity in senior corporate positions and financial performance of 2 million companies in Europe. We document a positive association between corporate return on assets and the share of women in senior positions and establish two potential channels through which gender diversity may affect firm performance. The positive correlation [...]
This paper uses matched employer-employee data to study the effects of corporate governance on the earnings and composition of the firm's workforce. Stronger corporate governance is measured using the passage of shareholder-sponsored proposals to declassify the board of directors. Following vote passage, employee earnings decrease by 12% on average, directionally consistent with previous research. However, [...]
Previous studies on the value relevance of board gender and ethnic diversity have produced mixed results. This paper re‐examines this relationship using hand‐collected data of 245 South African listed firms over the period 2008–2013. We document a positive and significant effect of both board gender and ethnic diversity on firm value. We also find that [...]
Based on a large international sample, we show how decision-making power of CEOs in conjunction with prevailing institutional discretion relates to corporate resources allocated towards CSR strategy. First, especially in environments with greater institutional discretion, powerful CEOs pursue exaggerated CSR strategies aiming at reputational gains for their private benefit, while not necessarily bearing the costs [...]
