INVESTORS’ EXPECTATION ON RATE OF RETURN AND MORAL IMAGE OF COMPANIES

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Abstract

Corporate Social Responsibility (CSR) has become a fad in different industries, especially the finance industry. It is time to explore the relationship between images of companies and investors’ attitude. The purpose of this paper is to reflect the relationship between moral and immoral images of companies in relation to investors’ expectations on the rate of return of companies. Newspaper cuttings and fact sheets of selected companies were provided to participants to study their perception on the moral/immoral images of companies and investment attitude with questionnaires verified participants’ involvement in reading materials provided. Quantitative analysis of the questionnaires showed that an immoral premium was found in the expected returns of the participants. After the investment attitudes were induced on the participants, the participants gave a higher expected return on the company with a poor moral image (M=0.91, SD=1.05) than a company with a good moral image (M=0.46, SD=0.44). Immoral premium found in the expected returns for both before and after the time that the investment attitudes were induced to the participants. This research is managerially and strategically relevant and topical about the suggestion of immoral premium. However, longitudinal and qualitative analysis from the finance and social perspectives are required to support findings of this study.

Keywords: Corporate Social Responsibility (CSR), Moral Image, Immoral Premium

Received: 06.07.2017

Accepted: 01.11.2017

JEL Classification: G02, G32

How to cite this paper: Yue, H.-Y., Yeung, S. M. C., Chung, K. H. K., & Tong, C.-L. (2018). Investors’ expectation on rate of return and moral image of companies. Corporate Ownership & Control, 15(2), 99-115. https://doi.org/10.22495/cocv15i2art9