Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy |
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| Institution: | 1. School of Finance, Capital University of Economics and Business, Fengtai, Beijing, China;2. Department of Accounting and Finance, University of Sussex, Brighton, United Kingdom;3. Department of Finance and Economics, Hanken School of Economics, Helsinki, Finland;4. Faculty of Finance and Accounting, Prague University of Economics and Business, Prague, Czech Republic;5. Department of Building and Real Estate, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong |
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| Abstract: | We examine the effect of policy uncertainty on firms' strategy of corporate social responsibility (CSR). During uncertain times, firms strategically increase their commitment to CSR causes. Policy uncertainty is positively associated with CSR performance regardless of the estimation method. CSR strategy can substitute for lobbying when firms attempt to manage policy uncertainty. Improved CSR performance can reduce firms' exposure to policy uncertainty which indicates that CSR commitment can deliver insurance-like benefits. The findings highlight the value of CSR commitments during uncertain times. |
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