Abstract:
A company's intrinsic or fundamental value is represented by its financial book figures. The market value, on the contrary, is based on the "estimates" of company expected performance. The higher the difference between the intrinsic and the market value, the higher the chance of perceptual errors in the estimates. These could be driven by a lack of information in the market. How does the market treat companies that are more transparent, undertake sustainability reporting, and are corporate social responsibility (CSR) volunteers? Are their shares likely to be treated as glamour or value shares? We examine this in the context of the Indian stock market over the decade of 2009 to 2019 for BSE500 companies. We find that companies that are both CSR and Global Reporting Initiatives (GRI) volunteers report the largest proportion of value shares-most closely aligned market values to book values. We expected that the non-volunteers would have the largest proportion of glamour shares, but we found that the group that volunteers for GRI but is not a CSR volunteer has the highest proportion of glamour shares. One possible explanation could be that the market perception of value is possibly driven by a company's voluntary CSR status rather than the GRI reporting.
