Corporate Social Responsibility's Impact on Stock Performance -- The Case of the Children's Food and Beverage Advertising Initiative

This study examines the abnormal returns to the shareholders of companies that have enrolled in the Children's Food and Beverage Advertising Initiative (CFBAI) as well as those of their competitors that did not join the initiative. We find that, on average, the former group of companies is much larger than the latter. Shareholders of both groups experience significant abnormal return of -3% in the month of enrollment. However, the former group experiences an abnormal return of 16% over the next five years, while those of the latter experience an abnormal return of -34%. These abnormal returns net out to be an average abnormal gain of $14.5 billion for companies enrolled in the initiative and an average abnormal loss of $1.7 billion for non-enrolled competitors. The findings suggest that being in a position to be socially responsible is of benefit to shareholders while being ill situated can hurt them