Effect of target-and-incentive-consistency of unexpected positive earnings news on investors’ responses to corporate social responsibility performance
ISSN: 0114-0582
Article publication date: 11 March 2019
Issue publication date: 18 March 2019
Abstract
Purpose
This study examines the effect of target-and-incentive-consistency of unexpected positive earnings news on investors’ use of corporate social responsibility (CSR) performance information in their pricing decisions.
Design/methodology/approach
A 2 × 2 full factorial between-participants experiment is conducted.
Findings
Target-and-incentive-consistency of unexpected positive earnings news moderates the effect of CSR performance on investors’ pricing decisions.
Research limitations/implications
Its findings shed insights on investors’ use of a mix of CSR, financial and governance information, support the financial information elasticity effect and add to the effect of financial information on investors’ use of nonfinancial information.
Practical implications
The effect of inelastic financial information in mitigating the CSR information effect can benefit investors who do not plan to use a CSR investment strategy. Knowledge of investors’ conditional use of CSR information can benefit firm managers and policy makers.
Originality/value
Its findings support a heretofore unexamined theoretical underpinning for the effect of financial information on investors’ use of nonfinancial information.
Keywords
Acknowledgements
Erratum: It has come to the attention of the Publisher that the article “Effect of target-and-incentive-consistency of unexpected positive earnings news on investors’ responses to corporate social responsibility performance” by Wang, L. (2019), Pacific Accounting Review, Vol. 31, No. 1, was published as a regular paper when it should have been included in the special issue “Sustainability accounting” guest edited by Associate Professor Umesh Sharma and Professor Sumit Lodhia, with Consulting Editor Professor Carol Tilt. This error was introduced in the editorial process. The Publisher of the journal Pacific Accounting Review sincerely apologises for this error and for any inconvenience caused.
The author is grateful to Brad Tuttle, Andrew Spicer and Charles A. Presslee for their valuable comments and help. The author also thanks Vinson Cai and Danielle Xu for their assistance with data collection.
Citation
Wang, L. (2019), "Effect of target-and-incentive-consistency of unexpected positive earnings news on investors’ responses to corporate social responsibility performance", Pacific Accounting Review, Vol. 31 No. 1, pp. 63-83. https://doi.org/10.1108/PAR-09-2017-0072
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited