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The effect of cause-related marketing on firm value: a look at Fortune’s most admired all-stars

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Listed:
  • Parker J. Woodroof

    (University of Central Arkansas)

  • George D. Deitz

    (The University of Memphis)

  • Katharine M. Howie

    (University of Lethbridge)

  • Robert D. Evans

    (Texas A&M International University)

Abstract

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.

Suggested Citation

  • Parker J. Woodroof & George D. Deitz & Katharine M. Howie & Robert D. Evans, 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, Springer, vol. 47(5), pages 899-918, September.
    • Handle: RePEc:spr:joamsc:v:47:y:2019:i:5:d:10.1007_s11747-019-00660-y
    DOI: 10.1007/s11747-019-00660-y
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