The market reaction to social responsibility disclosures: The case of the Sullivan principles signings

Few studies to date have tested for investor use of social responsibility information disclosures. This paper examines the stock trading volume and price return reaction to the 1977 disclosures that certain United States companies doing business in South Africa had agreed to the Sullivan Principles. Results indicate that non-signing firms experienced significantly higher unexpected trading volume than signing firms around the announcement date. As such, the findings represent further evidence of investor use of social responsibility information.