Effect of managerial ability toward corporate social responsibility on enterprise default risk

Abstract

In this study, we explore the effect of managerial ability toward corporate social responsibility (CSR) on enterprise default risk. We observe a negative correlation between CSR and enterprise default risk. Furthermore, we introduce managerial ability and analyze its effects on the default risk of enterprises with regard to implementing the CSR strategy. Studies have revealed that CEOs with higher managerial abilities can effectively capture the advantages of CSR. Our findings are robust to alternative variable measurements. In conclusion, the higher managerial ability is key proof of the effectiveness of CSR, which reduces default risk, especially during economic uncertainty. Our evidence on the effects of managerial ability toward CSR on enterprise risk default has important implications for practitioners and regulators.