Naughton, Wang, and Yeung (2013)

Naughton, James P., Clare Wang, and Ira Yeung.  “A Catering Theory of Corporate Social Responsibility.”  Working paper (Northwestern University), June 2013.

From the authors' abstract:  "We propose and test a catering theory of corporate social responsibility (“CSR”), under which rational managers respond to irrational investor sentiment for CSR and increase the firm’s short term stock price by boosting CSR related activities even though those activities do not increase the fundamental value of the firm. We use differences in valuation ratios between high and low CSR firms as a proxy for mispricing. We find a positive association between excess CSR expenditures and the lagged mispricing proxy...  We also find that future excess returns are negatively associated with excess CSR expenditures, providing evidence of price reversion."