What is it about?
The study finds evidence that CSI episodes cause a long-term shareholder value destruction, which is amplified for severe episodes of high profiled as experienced by local investors. It also argues that the rarity and the substitutability of the intra-stakeholder group may play critical roles on the magnitudes of CSI episodes on shareholder value.
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Why is it important?
Firms can act socially responsible and irresponsible at the same time (Oikonomou, Brooks & Pavelin, 2014; Strike, Gao & Bansal, 2006). Recent studies of corporate social irresponsibility (CSI) point out, that CSI is not necessarily the opposite side of the coin to corporate social responsibility (CSR), as context and incentives differ (e.g., Jones, Bowd & Tench, 2009; Lange & Washburn, 2012; Muller & Kraussl, 2011; Pearce & Manz, 2011; Price & Sun, 2017). Companies have an incentive to disclose the acts of CSR, whereas they have a disincentive to publicize the episodes of CSI, which are usually discovered by third parties such as news media or NGOs. These differences between CSR and CSI in a corporation’s incentive to disclose relevant information has considerable implications for the timing and terminology of CSI. In terms of timing, CSR research normally observes when an act of CSR was commenced, while CSI research only observes when it was discovered. Upon discovery, companies may disclose a narrative for when the act of CSI commenced but given the lack of verifiability of such narrative, it remains unclear how accurate the respective narrative is. To accurately reflect this inability of researchers to observe the commencement of CSI activities, we use the term “episode” instead of act to imply the uncertain commencement time.
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This page is a summary of: A Resource-based View of Corporate Social Irresponsibility: Evidence from Shareholder Value Destruction in China, SSRN Electronic Journal, January 2018, Elsevier,
DOI: 10.2139/ssrn.3241981.
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