The effect of corporate social responsibility on firms’ stock prices in Egypt

Abstract

Corporate Social Responsibility (CSR) is a concept that has attracted worldwide attention and acquired a new resonance in the global economy. There have been some theoretical and empirical mixed results from the literature review is that corporations make more long-term profits by operating with Corporate Social Responsibility (CSR). While others argue that CSR distracts from the economic role of businesses and have a negative effect on the Corporate Financial Performance (CFP) which negatively affect the stock price. So, the objective of this study to attempts to address the question of whether the Corporate Social Responsibility influences the Stock Price in Egypt using the sample of 26 companies from S&P/EGX ESG Index through using regression analysis on 7 years starting from 2011 till 2017. The main results verify the existence of a negative effect of CSR on stock price which confirms hypothesis H1. This result seems to oppose the idea that the CSR firms are the more virtuous, having better performances they bear some initial costs.