Tushar Amin and Cigdem Degirmencioglu discuss CSR in the U.S and Sweden in their article, “CSR in Commercial Banks-Comparison of the U.S and Swedish Market.” This article highlights the fact that CSR has been a topic that has been talked about for the last three decades when pertaining to financial firms. Companies have sought to make themselves more socially responsible as CSR is becoming a major practice. The notion is brought forward that CSR is important for commercial banks. “CSR in financial firms is as important or more important as other industries because of the influence on its operating environment and crucial results in their performance to survive in the market.” (Amin, Degirmencioglu, 2011). CSR is also important for banks due to the financial crisis that occurred in 2008. “Alan Greenspan, former Federal Reserve chief so eloquently said – ‘the financial crises will happen again unless we succeed in changing human nature (News 2009).’” (Amin, Degirmencioglu, 2011). In comparing CSR is U.S and Swedish markets, U.S has larger CSR implementation than in Sweden. Focusing on CSR in the U.S, CSR is something that becomes natural for U.S businesses, based on the Anglo Saxon law. With less government interference, it is expected that companies act more philanthropic to benefit the society. “Griffin and Vivari (2009) have mentioned that CSR in the U.S has been accepted as volunteerism and it is encouraged as a part of corporate culture because of the traditional understanding of the CSR concept.” (Amin, Degirmencioglu, 2011).

This article provided an interesting take on CSR and banking, comparing CSR implementation between the U.S and Sweden. It was a bit surprising to see that the U.S has more CSR implementation, since companies are expected to behave socially responsible that can benefit the society. From my perspective, I agree that CSR is a concept that companies in the U.S should follow. Banks providing an ethical nature comes off well for the consumers, as they place confidence in these banks. Some banks are notorious for scandals, such as Wells Fargo and their fraudulent account scandal. A company implementing CSR shows society that they are ethical and care about society instead of themselves.

Source: Amin, T., & Degirmencioglu, C. (2011). CSR in Commercial Banks-Comparison Between U.S and Swedish Markets.

Okpara and Idowu focus on Corporate Social Responsibility (CSR) in their book, “Corporate Social Responsibility: Challenges, Opportunities, and Strategies for 21st Century Leaders.” This book places major emphasis on what CSR and why it is effective for companies. In Chapter 11, “Corporate Social Responsibility implementation in the EU and USA: The trend and the way forward,” they explain how CSR is used in the U.S. They explain that consumers expect companies to engage in socially responsible behavior. It is stated, ““The US is highly ‘corporatised society’ as a large number of corporations over the last century has emerged there with significant public and private ownership. The corporations dominate Americans’ personal and business lives. As a result, collective business behaviour has always been the integral part of the nation’s legacy, culture, structure and behaviour. Hence the American citizens expect their corporations to ‘behave better, to act in the social interest and to be well, a good citizen’ (Googins, 2002).” (Okpara, Idowu, 2013). This quote shows that in the U.S, consumers think highly of companies and expect them to have socially responsible behavior.

This chapter is very useful in thinking about what consumers think of CSR. In some articles, there is no clear indication on the relationship between consumers and CSR, some saying there is a positive link and some saying that consumers do not pay much mind to CSR. This book does prove, however, that consumers do believe that companies should follow CSR. I agree with Okpara and Idowu, because I do not think consumers would want to do business with a company that is unethical. This chapter from their book can prove useful in CSR research.

Source: Okpara, J., & Idowu, S. O. (2016). Corporate Social Responsibility Challenges, Opportunities and Strategies for 21st Century Leaders. Berlin: Springer Berlin.

Godfrey, Merrill, and Hansen discuss the relationship between Corporate Social Responsibility (CSR) and shareholders. Shareholders are people who own shares of a company. The article determines of shareholders gain anything when managers of different companies enforce socially responsible activities, also known as CSR. A study is conducted based on a theoretical model which links these socially responsible activities to shareholder value when a firm experiences a negative circumstance. “We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance-like protection than other types.” (Godfrey, Merrill, and Hansen, 2007) They tested the effects of CSR engagement, stakeholder characteristics, firm characteristics, and event characteristics. The study also involved different dependent and independent variables. The results from this study show that CSR is very beneficial for shareholders, especially investment aimed CSR, when likely there is a negative event that occurs. Firms that participate in CSR can generate more value for their shareholders.

This article focuses on the aspect of shareholders and how CSR can help them. It shows that firms that engage in CSR are beneficial for both firms and shareholders, since firms gain more shareholders and shareholders receive a lot of value. This article can help me greatly in thinking about the link between CSR and finance. The article and the study shows that more firms should engage in CSR, shedding a positive light on on the concept, and proves beneficial for many. The article was also cited by many, so it establishes credibility for further research.

Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal,30(4), 425-445. doi:10.1002/smj.750

Mohr, Webb, and Harris (2001) provide a different outlook on Corporate Social Responsibility (CSR): researching the consumer side of CSR. “Do Consumers Expect Companies to be Socially Responsible? The Impact of Corporate Social Responsibility on Buying Behavior,” focuses on what consumers conclude about CSR for companies. Corporations have been pushing to implement socially responsible activities to improve their image for consumers. The authors conducted a research project to determine what consumers think about CSR. Conducting 48 in-depth interviews and analyzing a host of variables, it was concluded that the interviewees had positive thoughts towards socially responsible companies and that most of the respondents don’t really think about CSR when wanting to purchase with a company.

I decided to take a different approach with this blog post; instead of focusing on CSR and finance, I decided to focus on what consumers think about CSR. I believe that if we look into the relationship between CSR and finance, we should first know a good deal about what consumers think about CSR, because that is what it is for, the consumers. From my perspective, I enjoyed the fact that the authors went in-depth on what the consumers thought about socially responsible companies, and focused on something that wasn’t really focused on, as stated in their abstract: “…researchers have provided little information on how corporate social responsibility impacts profitability. This paper reports the findings from in-depth interviews of consumers to determine their views concerning the social responsibilities of companies.” (Mohr, Webb, and Harris, 2001) In understanding the consumers’ point of view on CSR, we can better understand CSR ourselves.

Source: Mohr, L. A., Webb, D. J., & Harris, K. E. (2001). Do Consumers Expect Companies to be Socially Responsible? The Impact of Corporate Social Responsibility on Buying Behavior. Journal of Consumer Affairs,35(1), 45-72. doi:10.1111/j.1745-6606.2001.tb00102.x

Bert Scholtens analyzes the relationship between Corporate Social Responsibility (CSR)  and finance. Scholtens makes us aware that there is a divided opinion on whether or not there is a link between CSR and finance, with some reporting positive links and some reporting negative.  “The World Business Council for Sustainable Development sees the financial industry as a leader with respect to sustainability, and the industry itself claims it makes the world a better place to live in (Schmidheiny and Zorraquı´n, 1996). Socially responsible investing and shareholder advocacy would promote socially and environmentally desirable activities.” (Scholtens 2006) This quote shows that there is, in fact, a positive relationship between CSR and finance, with more responsibility bringing in more investing. Scholtens sheds light on a notable linkage between CSR and finance: the environmental Kuznets curve (EKC.) Scholtens (2006) explains the EKC: “ The (EKC) describes the relationship between economic development and the environmental burden to society (Grossman and Krueger, 1995).” Scholtens brings an economic aspect to the topic of CSR and finance, saying that the environment changes with economic development; “…environmental pressure increases faster than income at early stages of economic development and slows down at higher income levels.” (Scholtens 2006). Scholtens also brings the point that a well-developed financial system attracts more people to different investment opportunities, and increases opportunities for the public.

I believe that this was a rather interesting read about CSR and finance. From my perspective, I agree with the idea that a well-developed financial system attracts more people. The public wants to do business with a corporation that is stable and provides opportunities for them. Scholtens shows that CSR is important for a company. With more socially responsible investing, it attracts more investors and encourages more socially responsible activities. Given the fact that there are some ethical controversies when it comes to some financial institutions, this point proves that CSR is needed for a financial system.

Source: Scholtens, B. (2006). Finance as a Driver of Corporate Social Responsibility. Journal of Business Ethics,68

El Ghoul, Guedhami, Kwok, and Mishra evaluate the impact of CSR on the cost of equity capital for a firm. Equity capital is defined as, “capital received for an interest in the ownership of a business.” It is noted that financial firms have been issuing CSR reports due to the fact that investors would prefer to invest in firms that pursue socially responsible activities. Firms have also taken many efforts to incorporate CSR into different components of their business. To conduct the study, the authors estimated firm’s cost of equity and used that data towards various analyses, such as univariate and multivariate regression analysis. The article goes extremely in depth in their study, and their results show that firms with higher CSR scores display cheaper costs of equity financing. Furthermore, improvement in responsible employee relations, environmental policies, and product strategies help reduce the cost of equity capital.

I believe that this source is really reliable in that the authors were able to prove that CSR helps financial firms. Their data shows that high CSR exhibits cheaper equity capital. The article included many different tables and went in depth into their study. They gave information on each type of analysis they did and went greatly into detail. I do agree with the author that high CSR is better for the Fortune 1000 companies, as they would yield more investors. It is a preference for investors to invest in a company that engages in socially responsible acts, and the data proved that. Better employee relations and better product strategies also attract more investors. This article was cited about 1000 times, so it is a useful article. Although it is quite lengthy and has many statistical elements that may be hard to follow at first, it is still an interesting read.

Source: Ghoul, S. E., Guedhami, O., Kwok, C. C., & Mishra, D. R. (2010). Does Corporate Social Responsibility Affect the Cost of Capital? SSRN Electronic Journal.

Abigail McWilliams and Donald Siegel discuss if there is a correlation between Corporate Social Responsibility and finance, or if it just misspecified due to limited and empirical research. The approach is made that the studies at that time had models that misspecified the correlation by eliminating important variables, with one variable being R&D (Research and Development) and the investment of it by a firm. There are two sets of studies involved: one set involving assessing the short-term financial impact if a firm were to commit socially responsible and irresponsible acts, and another set evaluating the nature of CSP (Corporate Social Performance, which is a measure of CSR) and long-term financial impact. These studies used event study methodology, a statistical method evaluate the effect of an event on a firm and its value. Results for the short term assessment were mixed, with some researches noting negative results, some researches noting positive results, and some noting no relationship between CSR and financial performance. Results for the long-term assessment were also mixed. McWilliams and Siegel expected these inconsistent results and instead believed there was a strong correlation between R&D and CSR. Testing this hypothesis by using a misspecified model by Waddock and Graves (1997) and adding R&D intensity to this model, and using CSP as a measure, they found that CSP and R&D had a strong correlation, debunking the idea that the two did not have a correlation.

This research by McWilliams and Siegel does provide a valid resource, due to the fact that they debunked the idea that CSR and financial performance did not have a strong correlation, whereas they did. Most CSR articles focus on just if there is a connection between the two, but this article proved a little different. While they did prove it did have a correlation, they presented a different side to it, basing their whole article on the question on whether or not CSR and finance were linked, and then went to prove it did. This article was cited by almost 3000 people, so it goes to show how reliable the article is. It was an interesting read because McWilliams and Siegel presented a huge aspect in the fact that many studies on CSR and finance lacked an important variable, which was R&D and then tested it to show that it was a significant variable in these studies.

Source: Mcwilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal,21(5)

“I bought this stock for $1.50, a share for 1000 shares, and later sold it for $2.30 a share. I just made $800.” These are the kind of words I have been hearing from my mom for the last two years. No, she is not a stockbroker; she is far from it. Her career does not even fall in the same field as finance. She works full-time, but she invests in stocks on the side.

My mom works a full-time job Monday-Friday, and sometimes a part-time job on the weekends, all as an Occupational Therapist Assistant. She makes good money from her career, but she always finds ways to diversify her income, and investing in different stocks is the way she does that. Rather than investing in the large-cap stocks like most people, she invests in penny stocks, which are shares of small public companies, such as new companies, where the prices are low. These stocks do not require that much money to invest, as they are usually under $5 a share, so one does not see themself putting too much money at risk.

My mom learned to invest in penny stocks from my uncle in Canada, who works for Fidelity Investments. She was looking for a way to have another income, and my uncle came in and showed her the way. He taught her everything: the pros and cons of investing, which stocks to invest in, when is the best time to sell, and how to observe different trends. I have never seen my mother so excited to learn something new, not since she was in college. She quickly got into investing, and before I knew it, she would be on her phone daily. Normally, I would never see my mom on her phone, (only to text a few people and go on Facebook here and there). That habit changed quickly, and anytime I would see her sitting, she would be on her phone. I would take a glance and see green and red arrows (indicating the status of a stock.) At first, I thought investing in stocks was such a huge gamble, as you can never anticipate when a stock can plummet and you can lose a substantial amount of money. My mom changed my views, however, when I witnessed her make good money from it. In fact, she even took us out to dinner one time, using her earnings from her new side hustle.

My parents always told me that I should pursue new things, to have an eagerness to learn. I decided to act on that and learn what my mom’s new interest was. A recent example of my mom’s endeavours includes Sesn Bio. I sat down and said, “Mom, tell me about the investing you do.” She actually became ecstatic when I asked and proceeded to tell me about what she was doing with Sesn. “I recently bought 1000 shares of Sesn, at $2.29 per share, so I invested $2,290 into this stock. I monitor the stock ticker, and at times, the value dropped, and raised slowly again. After a while of monitoring, I sold the stock for $2.86 a share, so $2,860. I got $570 in profit, within just a few days!” I was immensely astounded from what she told me. This happens quite often, her yielding profit from her stock endeavours. Sometimes, she is in a loss, as a stock she buys ends up going lower and lower on the stock ticker. She never panics, as some people do. Rather, she just waits until something happens, either the stock price increases, or she has the opportunity for a buyout. A buyout opportunity is when a big corporation buys the penny stock for a big price. I asked, “What’s an example of a buyout?” “Say Pfizer looks into buying Sesn Bio due to them having credible research and data on cancer. Pfizer decides to buy Sesn Bio at $20 a share, which would give any stockholder a huge profit. Pray for me that I get one,” she would respond. As you can see,  it is a rare occasion that my mother waits for.

During my senior year in high school, I was trying to discover what my interests were and what major I wanted to study in college. Thinking about my different conversations with my mom, I realized that stocks and investing were my interests; the stock market, financial markets, and investment banks attracted me heavily. Witnessing the whole idea of investing, tracking stocks, and doing research on what a stock is from my mother seemed rather riveting to me. Looking into a major relating to stocks, it came to finance.

Finance as a major is all around us in the world. It is a driving force for corporations and the economy. I am more of a math person than a science person, and I enjoy number crunching, thinking analytically, such as deciphering trends to figure out when is the best time to invest, and recently, stocks. I did have trouble thinking about what major to pursue during senior year, but the world of finance welcomed me with open arms.