Journals Proceedings

Abstract

Due to globalization processes and technological development, companies are receiving more influence on global society than ever. Therefore, business misconduct causes enormous harm to individuals, communities, environments, and stakeholders, whereas ethical behavior is considered to increase the shareholders` value. This confidence has sparked a worldwide call for sustainable, responsible and ethical corporate behavior that gives companies a competitive advantage and greater social and, eventually, economical value. Despite an extensive analysis of the field, there is no consensus in the scientific literature regarding whether corporate social responsibility leads to higher company value in the eyes of financial market participants. The main goal of this paper is to examine the impact of a company`s corporate social responsibility on its financial performance. In order to achieve the objective of the research, quantitative analysis is used; in particular the event study method is applied for assessing the financial impact of new information on company’s stock price. An event study is employed to examine the relationship between positive and negative statements and changes in a selected stock`s returns on a daily basis, using the concept of abnormal returns as a key measure. The transparency of the events mentioned is ensured using the FTSE4Good Index. The results of the event study are verified by analyzing a portfolio.