Multi-dimensional corporate social responsibilities and stock price crash risk: Evidence from China |
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| Institution: | 1. School of Business, Jiangnan University, Wuxi, Jiangsu 214122, China;2. School of Information Management, Jiangxi University of Finance and Economics, Nanchang, Jiangxi 330032, China;3. F.C. Manning School of Business Administration, Acadia University, Wolfville, NS B4P 2R6, Canada;4. Odette School of Business, University of Windsor, Windsor, Ontario N9B 3P4, Canada;1. College of Business Economics, Qatar University, Doha, Qatar;2. Gerald Schwartz School of Business, St. Francis Xavier University, Antigonish, Nova Scotia, Canada;1. School of Accounting and Finance, University of Waterloo, 200 University Avenue West, Waterloo, ON, N2L 3G1, Canada;2. John Molson School of Business, Concordia University, 1450 Rue Guy, Montréal, QC H3H 0A1, Canada;1. School of Business, Renmin University of China, Beijing, China;2. Department of Finance, Western Kentucky University, Bowling Green, KY 42101, USA |
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| Abstract: | Worldwide, there has been an ongoing debate about whether corporate social responsibility (CSR) can lead to better financial market performance, or whether corporations can do well by doing good. Working with a sample of all listed companies in China from 2010 to 2017, this study examines the impacts of three dimensions of CSR on stock price crash risk. We find that CSR, especially firms' responsibility to the environment and stakeholders, significantly reduces stock price crash risk, while social contributions such as charitable donations have no significant effect on stock crash risk. Attracting long-term institutional investors is the primary mechanism through which CSR can curb crash risk. Mitigating earnings management is also a channel through which overall CSR and stakeholder responsibility contribute to a lower stock crash risk. Finally, we find that stakeholder responsibility and environmental responsibility can help improve stock market performance. |
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