The effect of corporate social responsibility on stock response to the S&P 500 index additions

Abstract

Using a sample 150 firms that were recently added to the S&P 500 Index, we investigate whether corporate social responsibility ratings alters stock response after addition to the S&P 500 Index. We define and construct an appropriate data set, taken from the years 1990 to 2010. After controlling for factors connected with the addition to the Index, our tests find no relationship between corporate social responsibility and the stock response. We conclude that our empirical analysis does not lend credence to the relevance of CSR in improving stock response to the S&P500 index addition.