An investigation of corporate social responsibility reputation and economic performance

During the 1980s there was a rapid growth in tie United States of ethical, or socially responsible, investing Popular wisdom suggests that investors following this strategy may be trading off economic returns for psychic utility. However, in this paper we show that large U.S. manufacturing companies with better reputations for social responsibility outperformed companies with poorer reputations during the six-year period 1982-1987, and provided investors better stock market returns and lower risk The implications of these findings for the information content of accounting systems in a social welfare context, and for prescriptors in the business policy literature advocating a proactive social policy, are discussed.