Equity carve-outs and corporate social responsibility

Abstract

This study examines the extent to which corporate social responsibility (CSR) alters the stock response to the announcement of equity carve-out (ECO). Using a sample of the US ECOs over the 1991-2001 periods and employing the event study methodology, our results do not lend credence to the positive effect of CSR. Indeed, our empirical evidence does not show any significant effect of CSR on the abnormal return and cumulative abnormal return associated with ECO announcement. Possibly because the two views of CSR have merit or due to market efficiency.