Corporate social responsibility in the tourism industry: evidence from seasoned equity offerings

This study examines the impact of corporate social responsibility (CSR) in the tourism industry using seasoned equity offerings (SEOs) from 1992 to 2015. We show that tourism SEO issuers engaging in CSR activities experience less negative market reactions to SEO announcements. The findings also reveal that the negative reactions around SEO announcements are significantly lessened for tourism firms with better CSR performance in the context of high information asymmetry, because such activities serve as an ethical commitment to outside investors, and thus align the interests between SEO issuers and outside investors, which eventually mitigates negative market reactions to SEO announcements. Overall, these results indicate that tourism issuers with better CSR performance are able to reduce the agency costs and adverse selection problem for uninformed investors in the process of issuing SEOs.