Social responsibility and stock returns: an analysis of companies listed on BM&FBOVESPA - DOI: http://dx.doi.org/10.16930/2237-7662/rccc.v14n42p85-98

Abstract

The growing concern about the social and environmental issues has led companies to take a more careful position on their actions, in order to leverage a good reputation, which is considered a crucial element for success in the market. Corporate Social Responsibility refers to the adoption of socially responsible practices by the authorities, aimed at providing social and economic development of the environments in which they operate. At the same time, these actions meet the organizational interests that may lead to improved corporate image, market share gains, increase in profitability and increase the possibilities of continuity. In order to verify a possible relationship between corporate social responsibility practices and the economic results reported by the companies, this research sought to identify whether disclosure of the composition of the portfolio of the Corporate Sustainability Index (ISE) of BM&FBOVESPA impacts on variations in stock returns of the companies that are in the index. In this sense, the share of assets in the portfolio was considered as a proxy for sustainability initiatives, and the event study method was used to analyze the effect of the inclusion or exclusion of firms in the portfolio. ISE portfolios were analyzed for the years 2011 to 2013 and the results showed positive abnormal returns of the companies included after the release of the index and negative abnormal returns of the firms that were excluded from the index. It was found also that the market behavior returns to normality after the absortion of avaliable information, which supports the semi-strong efficiency hypothesis of the Brazilian capital market.