Do Stock Market Investors Reward Companies with Reputations for Social Performance?

Abstract

Stock market returns were compared with corporate reputations for social performance over the period 1984 through 1996. Financial performance was positively correlated with reputations for corporate social performance; the effect was strongest in the 1980s, but continued at a lower level through the end of the study period. Investors have been rewarded for having purchased stocks of companies with better reputations, even at premium prices.