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Research in The Planetary Bargain showed that share price and level of corporate responsibility had a weak positive correlation. This is backed up by Sandra Waddock of Boston College, who has shown that visionary companies can have a premium of over 5% over non-visionary companies. Visionary companies have had better social performance than non-visionary ones. This is illustrated in the following graph: -

Figure 1: The J-Curve

              Source: MHC International Ltd.

The graph illustrates the 'J-curve' effect whereby a company's share price at t0 falls to t1 when news gets out about the company's new values as published in its social report. However, as the company starts to implement its new social program through a new set of processes, the share price recovers to its previous value at t2 and then, when targeted outputs are attained, achieves its corporate responsibility premium at t*.

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* Contributed by: -
Saurabh Goswami & Malini Pande,
II Year Students,
IIM Kozhikode.