Are we paying attention to the right metric? The impact on firm value of consumers’ perceptions versus actual corporate social responsibility actions

Managers expect that firms' investments that increase the level of Corporate Social Responsibility (CSR) or reduce the level of Corporate Social Irresponsibility (CSiR) will improve relationships with key stakeholders, especially consumers. However, consumers' perceptions of CSR and CSiR may not match the actual firm activities. Our research addresses a current gap in knowledge how do consumers' perceptions of CSR and CSiR activities impact corporate financial performance relative to actual firm CSR and CSiR. To this end, we present a robust, longitudinal measure of consumers' CSR and CSiR perceptions of 51 business-to-consumer (B2C) firms consisting of more than 40,000 observations over three years. We find that consumers’ perceptions of CSR/iR shape their purchase intentions to a greater degree than do measures of actual CSR/iR actions. Moreover, willingness to purchase mediates the relationship between purchase intentions and firm financial outcomes.