How do investors react when corporate social responsibility initiatives end?

Although corporate social responsibility (CSR) has significant benefits for firms, firms also regularly make decisions about scaling back or discontinuing CSR initiatives. We conduct a series of experiments to examine whether investors react differently to stopping socially responsible initiatives compared to stopping other business activities. In our first experiment, we find investors react more negatively to stopping a CSR initiative than to stopping a general business initiative, even though reactions to starting the initiatives do not differ. In our second experiment, we find investors react more negatively to stopping a CSR initiative with a higher degree of ethicality than to stopping a CSR initiative with a lower degree of ethicality, supporting our theory that investors' more negative reactions result from the ethical nature of CSR. Additional experiments provide further evidence of theory and rule out alternative explanations. Although prior research suggests benefits of engaging in CSR, our results suggest such benefits may be undone when initiatives end