Monday, November 6, 2017

Looks Like Gordon Gekko was Right

It’s not a principle until it costs you money.
― Bill Bernbach

Corporate Social Responsibility damps stock price, says a new study by two Florida Atlantic University business professors.

A company that champions the environment, human rights, diversity, product safety, or other causes shoulders costs which depress its Wall Street performance, according to the study, because a CSR initiative diverts resources from growing the core business.

While Fortune 500 companies spend over $15 billion a year on philanthropic and CSR activities, most of the money may be no more than a disguised PR spend.

A study published last year shows a CSR initiative will succeed or fail in direct proportion to the CEO's greed, as measured by his ownership of luxury assets like fancy cars, boats, and second homes.

The study found that companies led by greedy CEOs have low-scoring CSR initiatives, while those led by generous CEOs have high-scoring initiatives. It also found that greedy CEOs undertake CSR initiatives primarily to increase their own power and pay.

The findings reinforce those of psychology studies showing that people who worship possessions and pursue their acquisition are less sensitive to their effects on others; less willing to share their money and possessions with charities, friends, or family members; and less likely to engage in environmentally responsible behaviors.

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