José Luis Fernández Sánchez

Can Corporate Reputation Protect Companies’ Value? Spanish Evidence of the 2007 Financial Crash

The aim of this paper is two-fold: first, to test empirically whether corporate reputation has a positive effect on the financial performance of companies (named the resource hypothesis), and second, whether it protects companies from a loss of value in a sudden financial crisis (the reservoir hypothesis). A sample of 38 Spanish firms included in the MERCO (the Spanish corporate reputation ranking) and listed in the Spanish stock market has been used. The analysis covers the period from September 2005 to April 2009. A multivariate regression model estimated by ordinary least squares was used to test the research hypotheses in order to monitor other variables that may affect the relationship between reputation and financial performance (measured by the companies’ return and risk). The results show that companies with a strong reputation had better financial performance than those with a poor reputation, before and during the financial crisis after the 2007 crash.

Análisis comparativo de eficiencia de los fondos de inversión sociales españoles frente a los fondos de inversión tradicionales en el período 2000–2004

RESUMEN El objetivo principal de este trabajo es contrastar si la decisión de inversión en fondos que incorporan en sus denominaciones factores no estrictamente financieros, tales como: éticos, sociales, ecológicos o verdes supone la aceptación de una menor eficiencia por parte del inversor, tanto en general como diferenciando para los distintos tipos de fondo y según sus sistemas de control, como indicador de la aparición de una nueva racionalidad social o sostenible en el inversor. La metodología empleada consiste en la contrastación estadística de las diferencias de eficiencia entre los fondos de inversión tradicionales y los fondos de inversión sociales en España para el período 2000–2004 lo que obliga a una selección previa de los indicadores de eficiencia debido a las especiales condiciones del mercado con el fin de garantizar la coherencia de los indicadores. Los resultados obtenidos sugieren que no existe una diferencia significativa de eficiencia entre los fondos sociales, con independencia del tipo y sistema de control que empleen, y los fondos tradicionales, dado que la diferencia obtenida en el periodo 2003–2004 se debe al efecto del tamaño, resultado que coincide con el obtenido por la mayoría de trabajos anteriores.

The relationship between corporate social responsibility and corporate reputation in a turbulent environment: Spanish evidence of the Ibex35 firms

Purpose – The purpose of this study is to provide more knowledge about the model to generate reputation and its relationship in the long term with companies’ strategy of social responsibility. Particularly, research is done to test whether there is a positive effect of firms’ social behaviour (corporate social responsibility [CSR]), analysing differences of intensity and consistency, on their corporate reputation (CR) and whether the current financial crisis is a factor that has changed the relationship between both variables (moderator factor). Design/methodology/approach – This study uses a sample of 26 Spanish large firms of the Ibex35 index and covers an eight-year period from 2004 to 2011. To test the hypotheses of this research, a fixed-effects model was estimated using moderating regression analysis. Findings – The results obtained show that, for the Spanish Ibex35 companies, CSR practices according to their consistency have a significant positive effect on CR and in turbulent environments, as in the current financial crisis, it has had a significant positive influence on the CSR-CR relationship. Originality/value – Although a substantial number of empirical studies have examined the relationship between firms’ strategy and their performance, only a few of them have analysed the impact of the external environment on this relationship, whereby there is a need for longitudinal studies with different economic scenarios to achieve better knowledge of the CSR–CR relationship.

Effect of social screening on funds´ performance: empirical evidence of European equity funds

The aim of this study is to evaluate the financial performance of European socially responsible investment (SRI) funds for the period 1993-2012 in order to contrast whether there is a relationship between the application of social screening on investment decisions and the fund’s financial performance measured by Carhart’s alpha. Regression analysis has been used to test the hypotheses of this research with a sample free of survivorship bias of 183 SRI equity funds from 14 European countries and the population of conventional funds from the same country and investment objective. The main conclusion of this study is that the application of social criteria in investment decisions carries a cost to the investor in terms of lower financial performance caused by differences in screening intensity.The aim of this study is to evaluate the financial performance of European socially responsible investment (SRI) funds for the period 1993–2012 to contrast whether there is a relationship between the application of social screening on investment decisions and funds’ financial performance measured by Carhart’s alpha. Regression analysis has been used to test the hypotheses of this research with a sample free of survivorship bias of 184 SRI equity funds from 14 European countries and the population of conventional funds from the same country and investment objective. The main conclusion of this study is that the application of social criteria in investment decisions carries a cost to the investor in terms of lower financial performance caused by differences in screening intensity.

The Impact of Internal Corporate Governance Mechanisms on Corporate Social Performance in the Banking Industry

The purpose of this chapter is to explore the relationship between corporate governance (CG) and corporate social responsibility (CSR) by analysing the effect of internal governance and monitoring mechanisms on the corporate social performance (CSP) of banks. To carry out our analysis, we propose to regress both a fixed-effects and a random-effects model using an unbalanced panel composed of 118 banks from 19 countries. The overall period of analysis runs from 2002 to 2014, although it has been divided into two different sub-periods before and after the banking system crisis: period 1 (2002–2007) and period 2 (2008–2014), in order to analyse the existence of a structural change with different impacts on the CG-CSR relationship. This research shows that some internal governance and monitoring mechanisms, namely, those related to controlling ownership and the structure of the board of directors, have an important influence on the social performance of banks, although these mechanisms were only relevant during the crisis period (2008–2014).