Slager and Chapple (2015)

Slager, Rieneke, and Wendy Chapple.  “Carrot and Stick? The role of financial market intermediaries in Corporate Social Performance.”  Working paper (The University of Nottingham), 2015.

From authors' abstract:  "We argue that the role of [financial market] intermediaries is not confined solely to information provision, but they may also incentivize high levels of [corporate social performance] through mechanisms such as exclusion threats, signalling, and engagement. We rely on unique access to the archives of the FTSE4Good Index to examine the effects of these mechanisms on CSP. The study shows that companies facing exclusion threats and signalling are more likely to comply with the intermediary’s criteria, and medium levels of engagement leads to higher levels of CSP."

LK notes:

FTSE4Good index.

“Hypothesis 1: Those companies who are threatened by exclusion from RI indices are more likely to comply with the intermediary’s general CSP criteria for index inclusion in subsequent years.

Hypothesis 2a: Those companies that signal CSP reputation to their stakeholders through intermediary endorsements are more likely to comply with the intermediary’s general CSP criteria for index inclusion in subsequent years.

Hypothesis 2b: Those companies that signal CSP reputation to their stakeholders through intermediary endorsements are more likely to have higher levels of CSP in subsequent years.”

“Previous research shows that RI indices act as reputation intermediaries by evaluating information regarding CSP for investors and other stakeholders (Doh et al, 2010; Consolandi et al, 2009). Our research shows that the role of intermediaries is not confined to information provision. We identify three mechanisms that may influence CSP: exclusion threats, signalling and engagement. By explicating these mechanisms we provide a more comprehensive view of the role of intermediaries in conferring legitimacy and reputation for CSP.”

Link (published version):  http://journals.sagepub.com/doi/abs/10.1177/0007650315575291?journalCode=basa