Chen, Wang, and Wang (2014)

Chen, Gary, Bin Wang, and Xiaohong (Sara) Wang.  “Corporate Social Responsibility and Stock Price Informativeness.”  Working paper (University of Illinois at Chicago), 2014.

Authors’ abstract: “We find that stock prices of socially responsible firms contain higher levels of private information as measured by idiosyncratic volatility. We investigate channels through which greater corporate social responsibility (CSR) performance results in more informative stock prices and find that greater CSR performance leads to more investors seeking information, as observed through searches on Google and EDGAR. We also find that institutional trading, particularly trading by socially responsible investment funds, enhances the impact of CSR on idiosyncratic volatility. Using alternative empirical specifications, we further establish a causal link between CSR and stock price informativeness. Overall, our findings suggest that CSR performance impacts investors’ incentives for gathering information and their trading behavior.”