The present paper explores, theoretically, and empirically, whether compliance with the International Code of marketing of breast-milk substitutes impacts on financial performance measured by stock markets. The empirical analysis, which considers a 20-year period, shows that stock markets are indifferent to the level of compliance by manufacturers with the International Code. Two important issues emerge from this result. Based on our finding that financial performance as measured by stock markets cannot explain the level of compliance, the first issue refers to what alternative types of mechanisms drive manufacturers who comply the least with voluntary codes such as the International Code. Conversely, from our finding that stock markets do not reward the most compliant, the second issue raised is an inherent weakness of stock markets to fully incorporate social and environmental values.
Bibliographical noteWe wish to thank the editor and the two anonymous referees for their helpful comments. We would also like to thank Annelies Allain, Mike Brady, Paul Gordon, Rania Kamla, Lee Parker, Pauline Weetman, Pei-Shan Yu and Stefan Zeume for their suggestions. We are indebted to Baby Milk Action and the International Baby Food Action Network (IBFAN) for data provision. Any errors or omissions are our sole responsibility.
- Breast-milk substitute marketing
- Corporate social responsibility (CSR)
- Human rights
- Shareholder value
- Socially responsible investment
- Stock Market