Wednesday, January 22, 2014

The Value of Good Citizenship

If a company is a good corporate citizen, does that make you more willing to invest in its stock? A lot of investors might say no, especially if they look solely at a company's fundamentals when deciding whether to buy a stock. But a new study from the American Accounting Association suggests that corporate social responsibility has at least a subconscious effect on many investors.

The study found that investors who profess to be concerned solely about financials still raise a company's financial value by about 25 percent when that company has a strong record of corporate social responsibility. When a company is presented with a poor record of corporate social responsibility, investors tended to downgrade its value by about 9 percent.

When asked specifically about their decision, the investors in the study tended to assert that corporate citizenship played no role in their hypothetical investment choices. But clearly, it does affect the subconscious thinking.

No comments:

Post a Comment