CSR as reputation insurance: Primum non nocere
Dylan Minor,John Morgan +1 more
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TLDR
In this article, a case study and a multi-year analysis of stock price responses for S&P 500 companies following product recalls was conducted, and the authors found that firms that have high CSR ratings fare better than those that do not.Abstract:
An overlooked but important benefit of CSR is to insure a firm against a decline in reputation in the face of adverse events. Through a case study and a multi-year analysis of stock price responses for S&P 500 companies following product recalls, we find that firms that have high CSR ratings fare better than those that do not. Furthermore, a firm that is exceptional in both doing good and avoiding harm suffers virtually no reputational damage following negative media publicity. Using the results of this study, we offer a guide to managers for determining the appropriate amount and mix of CSR activities.read more
Figures
Figure 6: Percentage of Firms Receiving a Rating for Doing Good Source: KLD 
Figure 7: Percentage of Firms Receiving a Rating for Doing Harm Source: KLD 
Figure 2: Doing Harm Rating Over Time of Guidant and Boston Scientific Source: KLD 
Figure 3: Annual Incidence of Product Recall Events Source: KLD 
Figure 4: Plotting the Frequency of Different Changes in Firm Value Upon an Event Source: KLD 
Table 1: Abnormal Change in Firm Value upon an Event per Each CSR Type Source: CRSP, KLD, and Wall Street Journal
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References
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