Investors today are more likely to put their money and trust in companies that demonstrate corporate social responsibility, according to two SUNY Canton professors.
A research paper written by Associate Professor of Criminal Justice Brian K. Harte, Ph.D., and Assistant Professor of Finance Umesh Kumar was recently awarded “Southern Journal of Business and Economics Best Paper in Economics.” Their paper titled, “Corporate Social Responsibility and Investor Response in the Post-SOX Era.” was recognized at the Academy of Business Research Fall International Conference in Atlantic City, N.J., in September.
The paper examines Corporate Socially Responsible (CSR) behavior within convicted Fortune 500 companies and how it has become a cornerstone in corporate America, particularly in the post Sarbanes-Oxley (SOX) Act era. CSR policy encourages companies to take responsibility for their actions and have a positive impact on the environment, consumers, employees, communities, stakeholders and beyond.
“Corporate Social Responsibility became increasingly important for investors after companies such as Enron came under fire,” Harte said. “The SOX Act was enacted to try and create transparency for investors and curb unethical corporate behavior by providing severe punishments for both criminal offenders and the firms they represent. Before it was enacted, responsibility did not fall on single individuals within companies, but rather on the Boards within those companies. Now, many CEOs and CFOs have taken on the individual responsibilities if something goes wrong so there is a tangible person to assign blame to if need be.”
“Our research shows that companies who demonstrate social responsibility are being rewarded by investors,” Kumar noted. “Convicted firms adopting high levels of CSR behavior, garner more positive investor response in the Post-Sox era.”
The paper has not been published in its entirety yet.
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