The relationship between CSR and financial performance: the role of social media
The Relationship between Corporate Social Responsibility and Financial Performance: The Role of Social Media Abstract The starting point of this thesis is an observation of the increasing impact of business activity on the environment and society, and seeking ways to reconcile both business interests and those of society as a whole. In this sense, Corporate Social Responsibility (CSR) i.e. the voluntary adoption by companies of commitments to achieve the triple benefits of economic, social and environmental sustainability, is currently the main tool within the business context to reach this goal. However, after several decades of development, CSR is far from achieving its objectives and the scepticism about these practices, often perceived as mere marketing activities, increases. CSR requires a kick start that involves, by necessity, to: (1) make it clear and credible for all social and economic actors, which implies further development of its theoretical and conceptual framework; (2) analyze it in the current context, when new technologies of information and communication are changing the way we live and do business; and (3) further study the relationship between CSR and financial performance, since the acceptance and expansion of CSR policies largely depend on this relationship. Our dissertation addresses each of these issues, and our empirical analysis focuses on the Spanish banking sector in the aftermath of the last financial crisis. In Chapter 1, "The Illusion of CSR: Drawing the Line between Core and Supplementary CSR" we study how companies and stakeholders engage in social media communication to discuss Corporate Social Responsibility (CSR) We analyze the content of over a million microblogs on Twitter associated with the Spanish banking sector. We focus on key issues considered by banking institutions in their CSR reports, which we classify into Core or Supplementary CSR regarding their connection or disconnection with the core business activities of banking firms. We present evidence that CSR information has a relevant presence in social media. Our evidence suggests that internal users' information is opportunistic as their microblogs are biased towards favourable information. We also show significant differences between the information interests of internal and external users. Core CSR information is mainly referred to by outsiders, whilst insiders mainly communicate Supplementary CSR information. Finally, we provide evidence that firm size, listing status and impact on society are important determinants for firm initiated communication in social media. Chapter 2, "Stakeholder (Dis)Engagement in Social Media: The Case of Twitter(tm) and the Spanish Banking Industry" studies how companies and stakeholders engage in social media communication to discuss Corporate Social Responsibility (CSR) We analyze the content of over a million microblogs on Twitter associated with the Spanish banking sector. We focus on key issues considered by banking institutions in their CSR reports, which we classify into Core or Supplementary CSR regarding their connection or disconnection with the core business activities of banking firms. We present evidence that CSR information has a relevant presence in social media. Our evidence suggests that internal users' information is opportunistic as their microblogs are biased towards favourable information. We also show significant differences between the information interests of internal and external users. Core CSR information is mainly referred to by outsiders, whilst insiders mainly communicate Supplementary CSR information. Finally, we provide evidence that firm size, listing status and impact on society are important determinants for firm initiated communication in social media. In Chapter 3, "The Effects of Social Media Activism on Stock Markets" we study the consequences of external stakeholders' activism within the thriving environment of social media. Building on King and Soule (2007) and based on social movement theory, this study assesses the influence of activism on the stock market performance of the targeted firms. In particular, we focus on information published on Twitter(tm) by two critical external stakeholders: consumer associations and trade unions. To the extent that social media represent a valid medium to mobilize stakeholders' activism, protests on Twitter may damage firm reputation and legitimacy, leading to capital market reactions. Using a corpus of over 1.5 million tweets belonging to Spanish listed banking groups, we study the impact of activism by looking at targeted firms abnormal variations in price and trading volume. Our findings suggest that the activism of key stakeholders in Twitter has a significant impact on investors' decisions. Further, our empirical analyses indicate that the mechanisms to affect investors' behaviour differ depending on the characteristics of the external stakeholder group.