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The purpose of this paper is to investigate the empirical association between the tone of earnings announcements and a company’s membership in a sin industry.

This study constructs a model of the determinants of earnings announcement tone to examine the impact of sin industry membership on earnings announcement tone. An interaction term between CEO power (CEO–chairman duality) and sin industry membership is used to test whether CEO power moderates the strength of the association. The earnings announcements tone is measured using the spread in the proportion of positive and negative words. The category of sin industry includes not only industries such as tobacco, gambling and alcohol, but also industries associated with emerging environmental, social, and ethical issues (i.e. firearms, oil and cement).

The analysis of a sample of US firms from the 1994 to 2013 period shows that the tone of earnings announcement is less optimistic for companies in sin industries, but this association is weaker for companies that are led by powerful CEOs. The results remain robust to alternative definitions of sin industry membership and CEO power (CEO tenure) and to alternative model specifications.

The findings suggest that although sin companies cannot change the nature of their business, the management of such companies, in general, uses a less aggressive tone in their earnings announcements. These results further investors’ understanding of sin companies’ reporting behavior.

The purpose of this study is to examine the ways that sin industry companies attempt to utilise CSR reporting for legitimation.

Conventional and summative content analyses were carried out on annual CSR reports in UK tobacco and gambling companies, juxtaposed against analysis of the actual behaviour of the companies, collectively and individually.

The paper concludes that there is an ongoing tension between the business of sin industry companies and their attempts to establish and maintain any legitimacy, using CSR reporting in particular ways to try to prove their credentials to society and to engage salient stakeholder support. Ultimately, they aim to give themselves the scope for strategic choice to enable survival and financial flourishing.

Further research on CSR on other sin industries and in other jurisdictions with different regulatory situations could shed further light on the achievement or denial of different types of legitimacy. Studying different time periods as industries change would be of value.

On a practical basis, the study offers guidelines to stakeholders on the use of CSR reports from sin companies, and suggests the establishment of objective external CSR reports, overseen by accounting regulators.

The paper provides an overview of the role of sin industries in society, and mitigating their harms.

This study allowed for a comprehensive, dynamic and inclusive understanding of the interplay of CSR reporting and legitimacy by addressing conflicting interests between sin companies' social effects and inherent activities at the industry level. The methodology of multiple case study design in two sin industries combined content analysis of CSR reports, juxtaposed against analysis of behaviour in context. Previous research included the juxtaposition of actuality in analysis of only single case studies or particular issues. Thus, this research allows for a broader industry understanding. On a practical basis, the study offers guidelines to stakeholders on the use of CSR reports from sin companies, and suggests the establishment of objective external CSR reports, overseen by accounting regulators. At the social level, the paper provides an overview of sin industries in society, and mitigating their harms.

The authors provide evidence for the effects of social norms on corporate governance risk by studying “sin” stocks publicly traded companies involved in producing alcohol, firearms, biotechnology, gambling, military, nuclear power and tobacco. There is a societal norm against funding operations that promote vice and expropriation by controlling shareholders.

The sample is representative of S&P 500 firms in 2014. The authors use Datastream to obtain a sample of sin stocks. The authors’ descriptive analysis is completed by four variations of the basic ordinary least squares regression model according to dependent variable corporate governance risk score.

The authors find that non-financial incentives alone do not explain corporate governance risk. The authors provide strong empirical support for an alignment of financial and non-financial incentives. The authors show that when sin firm’s current performance is good, suggesting that the market holds a positive belief in firm’s future profitability, managers will likely have more incentive to expropriate shareholders.

Belonging of firm to a sin industry does not reflect the acceptance level of social norms. The evolution of social norms towards sin stocks overcomes the drawback of assuming a constant social norms level over time. Therefore, researchers are encouraged to use the changes in consumption of sin products as a proxy for the evolution of social norms and examine does sin matter in corporate governance issue in other countries.

Well-planned and well-managed philanthropy sin industries to creating education programmes for the disadvantaged to protecting the environment, in the name of corporate social responsibility has become a necessary ingredient in virtually every large corporation’s business plan.

This paper fulfils an identified need to study does sin matter issue in corporate governance issue.

The purpose of this paper is to examine corporate social responsibility (CSR) practices of SIN firms. SIN firms are firms from controversial sectors such as tobacco, alcohol, gambling and firearms.

This paper explains contrasts CSR practices of SIN firms with similar size and industry non-SIN counterparts.

This paper shows that SIN firms conduct more CSR practices than non-SIN firms. This paper also finds that CSR practices of SIN firms are value relevant only when these firms are performing below their peers.

The motivation for SIN firms to engage in higher CSR is the competitive advantage hypothesis and not moral rebalancing.

The purpose of this paper is to examine the temporal impact of individual and institutional investor sentiment on sin stock returns.

The authors estimate vector autoregressive models (VARs) to assess the dynamic relationships amongst pure sin returns and both types of investor sentiment. The justification for estimating VARs is that it allows one to study the potential influence that shocks (i.e. innovations) in individual and institutional investor sentiment might have on pure sin returns over time. Sin stock returns are separated into a market-based and pure sin component. Additionally, the authors split both measures of investor sentiment into rational- and irrational-based components.

This study finds that shocks to both individual and institutional rational-based sentiment positively influence pure sin returns for up to four months. However, irrational-based shocks have a positive, weaker and insignificant effect on pure sin returns. In addition, the results for the pure sin portfolio are compared to the S&P 500 and a comparables portfolio. The results show that sin stocks are less responsive than the S&P and the comparables portfolio to shocks in investor sentiment.

This study addresses some of the limitations found in the only prior study of sin stocks and investor sentiment (Perez Liston, 2016). Specially, this study investigates the link between sin stocks and sentiment in a dynamic context and also focuses the analysis on pure sin returns.

The purpose of this paper is to investigate the return performance of a portfolio of US “vice stocks,” firms that manufacture and sell products such as alcohol, tobacco, gaming services, national defense and firearms, adult entertainment, and payday lenders.

Using daily return data from a portfolio of vice stocks over the period 1987-2016, the author computes the Jensen’s α (capital asset pricing model (CAPM)), Fama-French Three-Factor, Carhart Four-Factor, and Fama-French Five-Factor results for the complete portfolio, and each vice industry individually.

The results from the CAPM, Fama-French Three-Factor Model, and the Carhart Four-Factor Model show a positive and significant α for the vice portfolio throughout the sample period. However, the α’s significance disappears with the addition of the explanatory variables from the Fama-French Five-Factor Model.

The author provides academics and practitioners with results from a new model. As of this writing, the author is unaware of any articles published in peer-reviewed academic journals that investigate vice stocks within the framework of the Fama-French Five-Factor Model (2015). First, the existing literature does not shed light on the relationship between “profitability” and “aggressiveness” (the fourth and fifth factors of the Fama-French Model) and vice stock returns. Second, within the framework of the Fama-French Five-Factor Model, the author shows results not only from a portfolio of vice stocks, but from various vice industries as well.

Graphic novels have a concept known as the origin story. The origin story is background information on how a hero or villain came into being. The purpose of this paper is to explore the origin story of corporate social responsibility at British American Tobacco (BAT). The CSR origin story is unpacked by examining corporate documents from BAT that discuss the initial development of the company’s CSR program. The BAT documents are part of the Legacy Tobacco Documents Library (LTDL), a searchable, digital archive developed and managed by the University of California, San Francisco. It contains 85,569,326 pages in 14,360,422 documents. The library was created as part of the tobacco company settlement of a major law suit in the USA.

For this case study, the authors searched the archive for documents from BAT that had the key words “corporate social responsibility.” The documents were then analyzed using qualitative content analysis to identify key themes related to BAT’s created of its CSR programs.

The two dominant themes were business case BAT made for CSR and the environmental factors that shaped CSR. The business case had sub-themes of the new operating environment and reinforcing employees. The environmental sub-themes were the importance of NGOS and the top issues to be addressed in CSR efforts. The themes helped to explain why BAT was engaging in CSR, the factors shaping the start of its CSR programs, and the issues it intended to address through CSR.

The analysis is limited to one organization and does not include interviews to go with the archived documents.

The paper considers the implications of the analysis for theory and practice for internal CSR communication.

The documents provide a rare glimpse inside a corporate decision to begin a CSR program and how the managers “talked” about CSR. Instead of examining external CSR communication, it examines the early days of internal CSR communication at a specific firm. The yields of the document analysis provide insights into how BAT conceptualized CSR and communicated the rationale for creating a CSR program internally. Research has relied primarily upon speculation of corporate motives or corporate public discourse designed to frame their CSR efforts. The internal documents provide an unfiltered examination of the motives for a CSR program. This allows us to better understand why a CSR program was created including the motives, targets, and desired outcomes.

The study aims to examine the extent of the corporate social responsibility (CSR) disclosure of Canadian cannabis firms and how they view responsibility. It also explores how cannabis firms build their CSR-based organizational identity through Twitter.

Deductive and inductive content analyses were carried through on tweets for a sample of 18 firms listed on the Canadian marijuana index during the legalization period of the recreational use of cannabis.

The results of this study show that cannabis firms approach responsibility by focusing on consumer and community/local development and by raising awareness and providing product information. The findings also highlight that the firms build their organizational identity mainly around their products’ medical benefits, the scientific efforts behind product development and the continual stigmatization they experience. At the industry level, cannabis firms attempt to build a harmonized identity to neutralize stigma.

This study allowed for a comprehensive understanding on how cannabis firms position themselves within an emergent sin industry and how they create their CSR identity through Twitter. It advances our understanding on the meaning of responsibility about the specific and distinctive features of the cannabis industry. From the methodology side, this study developed two content analysis tools: a coding instrument and a dictionary. These tools could be useful for conducting future studies related to the CSR disclosure of cannabis firms worldwide.

This article explores how companies in multiple controversial industries report their controversial issues. For the first time, the authors use a new conceptualization of controversial industries, focused on harm and solutions, to investigate the reports of 28 companies in seven controversial industries: Agricultural Chemicals, Alcohol, Armaments, Coal, Gambling, Oil and Tobacco.

The authors thematically analyzed company reports to determine if companies in controversial industries discuss their controversial issues in their reporting, if and how they communicate the harm caused by their products or services, and what solutions they provide.

From this study data the authors introduce a new legitimacy reporting method in the controversial industries literature: the solutions companies offer for the harm caused by their products and services. The authors find three solution reporting methods: no solution, misleading solution and less-harmful solution. The authors also develop a new typology of reporting strategies used by companies in controversial industries based on how they report their key controversial issue and the harm caused by their products or services, and the solutions they offer. The authors identify seven reporting strategies: Ignore, Deny, Decoy, Dazzle, Distort, Deflect and Adapt.

Further research can test the typology and identify strategies used by companies in different institutional or regulatory settings, across different controversial industries or in larger populations.

Investors, consumers, managers, activists and other stakeholders of controversial companies can use this typology to identify the strategies that companies use to report controversial issues. They can assess if reports admit to the controversial issue and the harm caused by a company's products and services and if they provide solutions to that harm.

This paper develops a new typology of reporting strategies by companies in controversial industries and adds to the theory and discourse on social and environmental reporting (SER) as well as the literature on controversial industries.

This paper aims to examine whether corporate social responsibility influences the cost of equity capital of firms operating in controversial industry sectors.

This paper computes the ex-ante cost of equity capital implied in analyst earnings forecasts and stock prices for a sample of 2,006 US firm-year observations belonging to controversial industry sectors (alcohol, tobacco, gambling, military, firearms, nuclear power, oil and gas, cement and biotechnology) during the period 1991-2012. The baseline regression model links CSR score to the implied cost of equity capital (ICC) and controls for firm-specific characteristics, industry factors and economic or market-wide factors. This model enables to capture the differential effect of CSR on ICC when the firm belongs to a specific sector of the controversial industries by adding an interaction term between CSR and the dummy variable representing this belonging.

The findings show two main results. First, CSR engagement significantly reduces the implied cost of equity capital (ICC) in all controversial industry sectors, taken as a group, as well as in each one of these sectors individually. Second, this effect is more pronounced when the firm belongs to the alcohol and tobacco industry sectors.

The findings have two important practical implications. First, they should increase managers’ confidence and incentives, in controversial industry sectors, to pursue CSR activities. Second, policymakers can encourage managers to undertake CSR initiatives in controversial industry sectors through tax incentives (e.g. reduce taxes for CSR related investment projects).

This paper extends prior studies that investigate the perceptions of capital market participants of firm’s CSR commitment (Sharfman and Fernando, 2008; Goss and Roberts, 2011; El Ghoul et al., 2011; Jo and Na, 2012; Bouslah et al., 2013) by examining the effect of CSR on ICC in the controversial industry sectors. It contributes to the debate around the relevance of CSR in controversial sectors by providing evidence of the reduction effect of CSR activities on ICC in controversial industries and by showing that this reduction impact is more pronounced when the firm belongs to alcohol, tobacco industry sectors.