Do CSR awards enhance firms' market value? Evidence from China

PurposeThis study aims to examine the impact of corporate social responsibility (CSR) awards on firms' market value considering these awards as a signal and proxy for the effectiveness of CSR practice. Design/methodology/approachThere are 342 announcements of CSR awards in China from 2006 to 2017 screened and analyzed using the event study methodology. FindingsThe stock market reacts significantly negatively to CSR award announcements in the short term. Firms that are state-owned, belong to the manufacturing industry, outside east China, repeatedly win awards and are listed in the Chinese H-share market, experience a stronger stock market reaction. Interestingly, the long-term stock returns of award winners are significantly positive for multiyear holding periods. Practical implicationsThe findings offer stakeholders clear guidelines on how to manage communications in the market to extract enhanced financial performance from CSR award announcements. Originality/valueThis study chooses CSR awards as a proxy for the effectiveness of excellent CSR practice. This study also contributes to the CSR literature by analyzing how investors use the award information to make investment decisions.