Does corporate social responsibility protect shareholder value from the shock of COVID-19? Evidence from China |
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Authors: | Danni Chen Xue Chen Huiying Sun |
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Institution: | 1. School of Business, Beijing Language and Culture University, Beijing, China;2. School of Management, Shenzhen University, Guangdong, China;3. School of Economics, Shenzhen University, Guangdong, China |
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Abstract: | Our study examines whether and how increased engagement in social responsibility activities by a firm affects movements in its stock prices during the COVID-19 public health crisis, which is regarded as an exogenous shock to economic ties between focal firms and their customers, employees, and suppliers. We find that corporate social responsibility has an inverted U-shaped relationship with shareholder value. The nonlinear relationship is more dominant at firms with higher cash-flow constraints and weaker cost-adjustment capabilities. Our research also generates meaningful implications for business practices. |
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Keywords: | corporate social responsibility COVID-19 shareholder value stakeholder theory |
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