Abstract
Drawing on contract theory, we predict that robust corporate social responsibility (CSR) practices can play a pivotal role in maintaining stakeholder support and safeguarding shareholder values amidst significant financial uncertainties caused by COVID-19 outbreaks. Through empirical tests centered on the January 2020 outbreak in China, we investigate whether pre-pandemic CSR performance influences firm resilience during the crisis. Results show high-CSR firms experienced moderate stock gains, while low-CSR firms faced significant losses around the Wuhan lockdown. Controlled models affirm a positive link between CSR ratings and abnormal stock returns during the outbreak, especially for firms in heavily affected regions and competitive industries. In line with contract theory, our findings underscore how strong pre-pandemic CSR enhances profitability and mitigates uncertainty across operations, supply chains, and demand fluctuations.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.