Trade war and corporate social responsibility: Evidence from China

Abstract

Based on the shock of the US–China trade war, this study investigates the effect of trade tariff shock on corporate social responsibility (CSR). We find that Firms increase CSR activities in response to the trade war and results are robust when using alternative control groups and excluding firms that experienced changes in their main business. We further examine the economic consequences of CSR and find that CSR during the trade war leads to an increase in sales and a decrease in stock price crash risk. Overall, this paper offers timely policy implications on the role of CSR in global trade events.