Abstract:
Corporate management is torn between
either focusing solely on the interests of stockholders (the
neo-classical view) or taking into account the interests of
a wide spectrum of stakeholders (the stakeholder theory
view). Of course, there need be no conflict where taking
the wider view is also consistent with maximising
stockholder wealth. In this paper, we examine the extent
to which a conflict actually exists by examining the
relationship between a company’s positive (strengths) and
negative (concerns) corporate social responsibility (CSR)
activities and equity performance. In general, we find
little evidence to suggest that managers taking a wider
stakeholder perspective will jeopardise the interest of its
stockholders. However, our findings do suggest that the
market is not only influenced by the independent CSR
activities, but also the totality of these activities and that
the facets that they value do vary over time. It seems
that most recently, the market has valued most firms that
satisfied minimum requirements in the areas of diversity
and environmental protection but were most proactive in
the area of employee-relations.
