Date of Award

1995

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Accounting

First Advisor

Barbara Apostolou

Abstract

This study examines the relative importance of criteria that investors consider when evaluating corporate social performance. Socially sensitive investing has increased in importance in the past two decades and the availability of information is key to effective social action. The Analytic Hierarchy Process (AHP) is used to determine the relative importance assigned to specific social criteria by representatives of socially or environmentally responsible mutual funds in the U.S. and abroad. A hierarchy of social criteria is developed. Five criteria enter into the evaluation of corporate social performance: community involvement, environment, fair business practices, human resources, and products and services. The most important criterion to the participants is environment, and it accounts for more than one-third (37.6%) of the evaluation of corporate social performance. The participants are particularly interested in a corporation's current impact (positive or negative) on the environment. Products and services (20.8%) is the second most important criterion to the participants, followed by fair business practices (16.2%), and human resources (15.9%). Community involvement (9.5%) is least important. Five subcriteria groups account for 60% of the evaluation of corporate social performance. These subcriteria groups are: (1) protection of the environment (23.7%), (2) product safety (11.2%), (3) environmental reporting/management issues (9.5%), (4) employee health and safety (8.4%), and (5) equal employment opportunity (7.3%). Accounting regulators may focus on the development of standards to properly report these issues to interested stakeholders. The findings may assist corporate managers in providing relevant social information and in the planning process.

Pages

163

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