The effect of cause-related marketing on firm value: a look at Fortune’s most admired all-stars
Companies are increasing their use of cause-related marketing as a means of communicating their commitment to corporate social responsibility while accomplishing their strategic goals. Although prior studies suggest that consumers react positively to cause-related marketing programs, understanding of their impact on financial performance remains limited. To address this gap, the authors employ an event study to examine the effects of cause-related marketing announcements on shareholder value using a sample of firms that appeared on Fortune’s Most Admired All-Star list between 2005 and 2017. Study results show that announcement of these initiatives results in a significant loss of shareholder value. These losses are most pronounced for firms making monetary-only contributions, in comparison to those that make in-kind donations. In addition, the negative effects are mitigated for firms that have stronger reputations, have greater resource slack, and operate in more dynamic industries. Moreover, low-reputation and low-slack firms benefit most from in-kind contributions.
Journal of the Academy of Marketing Science
Woodroof, P., Deitz, G., Howie, K., & Evans, R. (2019). The effect of cause-related marketing on firm value: a look at Fortune’s most admired all-stars. Journal of the Academy of Marketing Science, 47 (5), 899-918. https://doi.org/10.1007/s11747-019-00660-y