Can CSR engagement improve firm’s resilience to the COVID-19 pandemic? Evidence from the Moroccan stock market.

Abstract

The purpose of this paper is to investigate empirically the role of corporate social responsibility engagement on stock returns during the COVID-19 crisis in the case of a sample of Moroccan-listed companies. The authors use a difference-in-difference (DiD) regression estimated on a panel dataset of a sample of 23 Moroccan listed companies for the period spanning from March 2019 to March 2021. We identified the connection between CSR activities and financial returns by comparing the monthly stock returns of the treatment and the control groups. Empirical results reveal that the pandemic-induced decrease in stock returns is stronger for firms with CSR activities. It means that engaging in CSR activities does not immunize Moroccan firms during the pandemic. Our findings show that Moroccan’s stock market is unable to positively value CSR activities. The results indicate that agency problems lead Moroccan investors to overinvest in costly CSR activities, which reduce the value of the firms in times of the COVID crisis and delay their recovery from it. To the best of our knowledge, this study is the first to investigate the relationship between CSR activities and the resilience of Moroccan companies. Also, this study is distinguished by using the DiD method and by exploiting data from the Eikon Refinitiv database.