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