Index of Paper Presentations for the Parallel Sessions - Academy of ...

can also provide firms with an insurance-like protection, attenuating the negative fallouts from adverse events (Wileset al. 2010). This can help reduce the variability in future cash flows of firms. Therefore, we predict:H3a: CSP of firms would be directly positively related to their stock returns.H3b: CSP of firms would be directly negatively related to their stock risks.Methods, Findings, and ImplicationsTo evaluate these relationships, we compiled a dataset integrating information from several secondary sources. Ourfinal sample included 138 firms operating in the United States from multiple industries across the time period 2005-2009. A potential concern with modeling our theoretical framework is that CSP and brand equity of firms may beendogenous to stock returns and risks of firms and to each other. Further, stock returns and risks may also be relatedto one another. Ignoring these dynamics in analysis would likely give rise to inaccurate findings. We therefore useda three-stage least squares (3SLS) procedure as it allowed us to take into account the interdependencies between ourfocal variables. In addition, we controlled for a number of firm-level and industry-level covariates in our modeling.Overall, analysis confirmed that positive CSP enhances brand equity of firms, which in turn increases their stockreturns and reduces their stock risks, thus confirming H1 and H2a&b. Further, we also observed that CSP has adirect effect on stock returns and risks of firms, beyond its effect on these through brand equity, thus confirmingH3a&b. Admittedly, given data limitations from developing countries, our findings are based on a sample of firmsbased in the United States. However, we feel that our theoretical framework would be equally applicable in alleconomic contexts, and as such our findings should address some of the concerns facing policy makers indeveloping countries. Specifically, our research shows that CSP of firms has important implications for both brandequity and metrics of shareholder wealth.These observations suggest that managers of firms should consider the social implications of their actions not justfrom a purely philanthropic view, but also because doing so would generate economic value of them. Indeed, CSRappears not to be at odds with shareholder wealth as suggested by neo-classical economists, but rather in line with it.Since CSR appears to be a win-win game for both society and firms, our research suggests that there is no need forgovernments in emerging economies to legally mandate CSR activities. Rather, they may share findings of our workand similar other research (e.g., Luo and Bhattacharya 2009) to convince managers of the more direct effects of CSRon brands, customers, and their financial bottom-lines.References: Not provided due to space limitations. Available from the authors upon request