Stock Market Returns of 100 most Socially Responsible Corporations in USA and their Benchmark Indices

Abstract

Companies are increasingly finding innovative ways to do business in a sustainable and responsible manner. These corporations are responding to their own needs to run a conscience-driven business and also the needs of consumers who are looking forward to buy products and services that are friendly to the natural environment and society. A concern among companies and investors that wanted to go socially responsible and practice corporate citizenship was whether it will affect the competitiveness of the company and its returns, in terms of stock market returns. This  paper sets out to assess whether being a company that is engaged in green practices has lesser stock market returns, as compared to other companies An empirical study was carried out using a simple research tool, percentage analysis. The study measured stock market returns over  various time frames for leading companies that practices corporate citizenship, and it was compared with the stock market returns of leading benchmark indices. Rankings generated by an independent body, the  Corporate Responsibility Magazine, was used during the study. Certain preliminary conclusions are derived. The research led to the suggestion that there is a high possibility that the stock market returns of companies engaged in responsibility practices are higher than the broad market  returns. This is especially true in the long-term duration.