Does social responsibility enhance firm value and return in Brazil?

Abstract

This paper analyzes whether corporate social responsibility brings value and enhances returns to shareholders in the Brazilian market. We analyze the companies listed on BM&FBovespa stock exchange using two methodologies (panel regressions and event studies). The results indicate that firms listed in the corporate sustainability index (ISE) of BM&FBovespa have higher price-to-book when compared to companies not listed on ISE. The event study shows that companies that leave ISE show negative abnormal returns. Moreover, firms entering ISE show positive abnormal returns, although results are not statistically significant.