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| Untersuchte Arbeit: Seite: 58, Zeilen: 1 ff. (entire page) |
Quelle: Mackey et al 2007 Seite(n): 819, 820, Zeilen: 819: right col., lines 22ff; 820: left col., 1 ff. |
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| [Yet while we examine the market value conse]quences of firms’ pursuit of socially responsible activities that reduce the present value of their cash flows, we do not assume that maximizing the present value of a firm’s cash flows and maximizing a firm’s market value are equivalent. Such an assumption is only justifiable if all of a firm’s current and potential equity holders are solely interested in maximizing their wealth in making their investment decisions. If, however, at least some of these investors have interests besides simply maximizing their wealth in making investment decisions, then “maximizing the present value of a firm’s cash flows” and “maximizing firm value” are no longer equivalent concepts.
Market Efficiency Assumptions The model presented here also assumes that capital markets are semi-strong efficient. This means that publicly available information about the perceived value of a firm’s assets will, on average, be reflected in the market price of those assets. Semi-strong efficiency, in particular, implies that if firms engage in specific socially responsible activities in a public way, current and potential equity holders will be aware of both the nature of these activities and their impact on the present value of a firm’s future cash flows and will, on average, prefer to invest in. The model developed here adopts the simplifying assumption that these equity investors all have a preference for investing in firms pursuing a particular socially responsible activity-although this specific activity is not important in the model. Without loss of generality, this preference can also be interpreted as a preference for a particular bundle of socially responsible activities. This simplifying assumption is relaxed in the model extensions section of the paper. Mackey, Mackey, and Barney adjust their valuation of a firm’s equities accordingly. There is substantial evidence that U.S. capital markets are, overall, semi-strong efficient. This does not mean that the value of a firm’s equity always equals the true underlying value of the firm; certainly, there is a great deal of private information about the value of those assets and investor decisions are often systematically nonrational and affected by emotions. However, semi-strong efficiency does suggest that whatever public information exists about the value of a firm’s assets is, on average, likely to be reflected in the price of those assets. In this context semi-strong efficiency suggests that when a firm publicly pursues socially responsible activities that reduce the present value of its cash flows, current and potential investors will factor these actions and their consequences into decisions about whether or not to buy or sell this firm’s stock. Socially Responsible Activities and Firm Cash Flows Finally, while acknowledging that some socially responsible activities can sometimes have a positive impact on the present value of afirm’s [sic] cash flows , our model examines the consequences of only those socially responsible activities that reduce the present value of a firm’s cash flows. In this way the model focuses on a central theoretical issue raised by those who study corporate social responsibility that managers should sometimes abandon efforts to maximize the present value of their firm’s future cash flows in favor of socially responsible activities that reduce the value of those cash flows. Obviously, identifying socially responsible activities that increase the present value of a firm’s cash flows is interesting in its own right. However, no new theory is required to explain why firms will pursue such activities, once identified. Such actions are consistent with received economic and financial theories of firm behavior. But new theory is required to explain why firms might pursue socially responsible actions that reduce the present value of their cash flows. Focusing the model only on these situations helps develop this critical aspect of the theory of corporate social responsibility. |
Yet while we examine the market value consequences of firms' pursuit of socially responsible activities that reduce the present value of their cash flows, we do not assume that maximizing the present value of a firm’s cash flows and maximizing a firm’s market value are equivalent. Such an assumption is only justifiable if all of a firm’s current and potential equity holders are solely interested in maximizing their wealth in making their investment decisions. If, however, at least some of these investors have interests besides simply maximizing their wealth in making investment decisions, then “maximizing the present value of a firm’s cash flows” and “maximizing firm value” are no longer equivalent concepts.
Market Efficiency Assumptions The model presented here also assumes that capital markets are semi-strong efficient (Fama, 1970). This means that publicly available information about the perceived value of a firm’s assets will, on average, be reflected in the market price of those assets. Semi-strong efficiency, in particular, implies that if firms engage in specific socially responsible activities in a public way, current and potential equity holders will be aware of both the nature of these activities and their impact on the present value of a firm’s future cash flows, and will, on average, [p. 820] adjust their valuation of a firm’s equities accordingly. There is substantial evidence that U.S. capital markets are, overall, semi-strong efficient (Copeland et al., 1994). This does not mean that the value of a firm’s equity always equals the true underlying value of the firm; certainly, there is a great deal of private information about the value of those assets (Fama, 1970) and investor decisions are often systematically nonrational (Tversky & Kahneman, 1974) and affected by emotions (Schiller, 1999; Shefrin, 2000; Thaler, 1987a,b). However, semi-strong efficiency does suggest that whatever public information exists about the value of a firm’s assets is, on average, likely to be reflected in the price of those assets (Fama, 1998)3. In this context, semi-strong efficiency suggests that when a firm publicly pursues socially responsible activities that reduce the present value of its cash flows, current and potential investors will factor these actions and their consequences into decisions about whether or not to buy or sell this firm’s stock. Socially Responsible Activities and Firm Cash Flows Finally, while acknowledging that some socially responsible activities can sometimes have a positive impact on the present value of a firm’s cash flows (Godfrey, 2004; McWilliams & Siegel, 2001; Waddock & Graves, 1997; Godfrey, 2004), our model examines the consequences of only those socially responsible activities that reduce the present value of a firm’s cash flows.4 In this way, the model focuses on a central theoretical issue raised by those who study corporate social responsibility — that managers should sometimes abandon efforts to maximize the present value of their firm’s future cash flows in favor of socially responsible activities that reduce the value of those cash flows. Obviously, identifying socially responsible activities that increase the present value of a firm’s cash flows is interesting in its own right (Godfrey, 2004; McWilliams & Siegel, 2001; Waddock & Graves, 1997). However, no new theory is required to explain why firms will pursue such activities, once identified. Such actions are consistent with received economic and financial theories of firm behavior. But new theory is required to explain why firms might pursue socially responsible actions that reduce the present value of their cash flows. Focusing the model only on these situations helps develop this critical aspect of the theory of corporate social responsibility. 2 [...] prefer to invest in. The model developed here adopts the simplifying assumption that these equity investors all have a preference for investing in firms pursuing a particular socially responsible activity - although this specific activity is is not important in the model. Without loss of generality, this preference can also be interpreted as a preference for a particular bundle of socially responsible activities. This simplifying assumption is relaxed in the model extensions section of the paper. |
The source is mentioned in the text and on the previous pages, but without the slightest indication that the entire page is taken from it. It is worth having a look at the outline of the source:
One can see that at the end of page 819 -- in the middle of a sentence -- the part of footnote 2 that is on page 819 is copied, followed by page 820, where one finds the end of the sentence that has been started on page 819. This pattern is naturally created if the text is selected across the turn of the page in the PDF version of the source and then copied and pasted. In order to give the second part of that sentence a subject, "Mackey, Mackey, and Barney" has been inserted, although the original sentence rather refers to "current and potential equity holders", which leads to a total confusion of the meaning of the original text. |
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