IDEAS home Printed from https://ideas.repec.org/p/ebg/heccah/1076.html
   My bibliography  Save this paper

Do Ratings of Firms Converge? Implications for Managers, Investors and Strategy Researchers

Author

Listed:
  • Durand , Rodolphe
  • Touboul , Samuel

Abstract

Raters of firms play an important role in assessing domains ranging from sustainability to corporate governance to best places to work. Managers, investors, and scholars increasingly rely on these ratings to make strategic decisions, invest trillions of dollars in capital and study corporate social responsibility (CSR), guided by the implicit assumption that the ratings are valid. The authors document the surprising lack of agreement across social ratings from six well-established raters. These differences remain even when we adjust for explicit differences in the definition of CSR held by different raters, implying the ratings have low validity. The authors' results suggest that users of social ratings should exercise caution in interpreting their connection to actual CSR and that raters should conduct regular evaluations of their ratings.

Suggested Citation

  • Durand , Rodolphe & Touboul , Samuel, 2014. "Do Ratings of Firms Converge? Implications for Managers, Investors and Strategy Researchers," HEC Research Papers Series 1076, HEC Paris.
  • Handle: RePEc:ebg:heccah:1076
    as

    Download full text from publisher

    File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2524861
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Banerjee, Rajabrata & Gupta, Kartick, 2017. "The effects of environmental sustainability and R&D on corporate risk-taking: International evidence," Energy Economics, Elsevier, vol. 65(C), pages 1-15.
    2. Zhi Chen, 2023. "Investigate The ESG Score Methodology," Papers 2312.00202, arXiv.org, revised Jan 2024.
    3. Kartick Gupta & Chandrasekhar Krishnamurti, 2020. "Do Countries Matter More in Determining the Relationship Between Employee Welfare and Financial Performance?," International Review of Finance, International Review of Finance Ltd., vol. 20(2), pages 415-450, June.
    4. Iftekhar Hasan & Hui Li & Haizhi Wang & Yun Zhu, 2021. "Do Affiliated Bankers on Board Enhance Corporate Social Responsibility? US Evidence," Sustainability, MDPI, vol. 13(6), pages 1-27, March.
    5. Kartick Gupta, 2018. "Environmental Sustainability and Implied Cost of Equity: International Evidence," Journal of Business Ethics, Springer, vol. 147(2), pages 343-365, January.
    6. Ferrazzi,Matteo & Tueske,Annamaria, 2022. "Small and Medium Enterprises in Emerging Economies : The Achilles’ Heel of Corporate ESGResponsibility Practices ?," Policy Research Working Paper Series 10065, The World Bank.
    7. Banerjee, Rajabrata & Gupta, Kartick, 2019. "The effect of environmentally sustainable practices on firm R&D: International evidence," Economic Modelling, Elsevier, vol. 78(C), pages 262-274.
    8. Samuel Drempetic & Christian Klein & Bernhard Zwergel, 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review," Journal of Business Ethics, Springer, vol. 167(2), pages 333-360, November.
    9. Banerjee, Rajabrata & Gupta, Kartick & Krishnamurti, Chandrasekhar, 2022. "Does corrupt practice increase the implied cost of equity?," Journal of Corporate Finance, Elsevier, vol. 73(C).
    10. Jennifer Martínez-Ferrero & Shantanu Banerjee & Isabel María García-Sánchez, 2016. "Corporate Social Responsibility as a Strategic Shield Against Costs of Earnings Management Practices," Journal of Business Ethics, Springer, vol. 133(2), pages 305-324, January.

    More about this item

    Keywords

    N/A;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebg:heccah:1076. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Antoine Haldemann (email available below). General contact details of provider: https://edirc.repec.org/data/hecpafr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.