Study On Insurance Effect Of Corporate Social Responsibility Performance On Shareholder Value

In recent years, as the Chinese government proposed the idea of a harmonious society, the public has paid more and more attention to opportunity equality, pollution control, energy and natural resources consumption, protection of the rights and interests of consumers and employees as well as other issues. Corporate social responsibility has been increasingly valued by theoretical and practical circles and the implementation of social responsibility has become inevitable for modern corporations.The previous researches generally prove that good social responsibility performance at early stage can reduce enterprise losses caused by negative events and show the effect insurance of corporate social responsibility. In order words, when negative events bring negative influence or economic losses to corporations, the good social responsibility performance at the early stage can exert its effect insurance by forming moral capital; the insurance effect protects the enterprise value by reducing corporate stakeholders’ sanctions on corporation and reducing the loss of assets.In the paper, through the research method of case analysis, starting from the event of “rotten fruit”, comparative analysis is made on beverage industry tycoon Huiyuan Juice and Ander Juice involved in the event.Firstly, systematic evaluation is conducted on their performance of social responsibilities at the early stage by using index analysis.Secondly, the shareholder value of two companies is compared with EVA evaluation method; the influencing factors of shareholder value are further divided into profitability, growth of profits and sustainability of profits; whether the insurance effect of corporate social responsibility can further effect on the above mentioned three aspects is explored.Finally, a conclusion is made that when a negative event takes place, the corporate social responsibility have not ameliorated impacts brought by previous events and have not acted as a guard. This conclusion reflects indirectly that the capital market in China as the information transmission is partially regarded by the public. As a result, the guarantee effect fails to function. People feel difficult to understand corporate social responsibility, while those with low performance avoid the public criticism. Based on these, enterprises should not be carefree as they well performed the activities previously. Instead, they should pay more attention to the public opinion in case of benefit-impaired events. When selecting strategies for such activities, enterprises should be focused on corporate social responsibility that featuring “harm avoidance”.