Does Stock Market Explain the CSR Announcements to Investors? Or is it Just an Absurd Relation?

Abstract

The purpose of this study is to investigate the impact of Corporate Social Responsibility (CSR) announcements on shareholder and investors’ perceptions in Pakistan 46 press releases regarding CSR announcements are taken as a sample from the banking sector of Pakistan. Event study methodology with a maximum of 21 days window and 272 daily observations. Different event windows are taken to check the model for both the short and long term impact of CSR. This study is primary in nature as CSR growth and disclosure procedures are not mature yet in Pakistan. This study may post some points for the policymakers, companies, and officials to look after and promote corporate social responsibility in the corporate sector and give awareness to all the stakeholders about the importance and significance of Corporate Social Responsibility. The results indicated that investors are affected by CSR announcements but this effect persists for short time. There are insignificant results when we increase the period of analysis. There is less awareness of CSR activities among firms, investors, and shareholders because of the less regulatory support and promotion for these activities in Pakistan.