ABSTRACT
We examine the effect of CSR performance on the market premium to MBE (i.e., meeting or beating the earnings benchmark). We hypothesize and find that CSR performance reduces the market premium of MBE, particularly when firms with better CSR performance habitually beat earnings benchmark by a small margin. Our results suggest that CSR performance is a double-edged sword. Our findings are robust to a multitude of control variables and alternative measures. Contributing to the literature, our study highlights the detrimental impact of CSR performance on firm value during favorable occurrences when management deviates from long-term value creation that benefits society to deliver short-term positive outcomes. These findings carry implications for regulators and companies engaged in CSR initiatives.
Data Availability: Data are available from the public sources cited in the text.
JEL Classifications: G12; M41.
