SUMMARY
In this paper, we document that corporate social responsibility (CSR) has a negative effect on brand value. Our results show that this negative relationship exists only in firms where investor interest and visibility is high. We show that the negative impact of CSR policies is experienced by firms with high analyst following, larger size, and high earnings. We argue that markets consider CSR activities as a form of corporate charity with no expectations of positive returns. As a result, CSR activities are unnecessary costs incurred by firms. These costs result is adversely affecting current and expected financial performances. Given that current and expected financial performances are important determinants of brand value, firms with more visible CSR activities experience decline in brand values. We also show that certain components of CSR policy – firms who audit their CSR report from external auditors, brands of firms who report their global CSR activities, and brands of firms who publish a separate CSR report – exert more negative influence on brand values than the other components. All of these components are also related to increasing visibility of CSR activities.