Corporate Social Responsibility Investment Research Articles

Impact of CSR on stock return resilience during the 2020 public health emergency: Evidence from the Chinese financial market

Corporate Social Responsibility (CSR) can enhance firm value through non-profit channels, but it may also divert operational resources, potentially harming short-term financial performance. A key question in the literature is whether CSR can improve stock return resilience during negative shocks. Drawing on stakeholder theory, we hypothesize that CSR investment enhances stock resilience, though the effect may vary among firms. This paper analyzes financial data from 3153 Chinese listed companies alongside CSR ratings from the Hexun CSR database. Our findings indicate that firms with higher pre-event CSR ratings demonstrated stronger stock performance during the early stages of the public health emergency in 2020. These results remain robust across various checks and are supported by two instrumental variable approaches: local Confucian cultural influence and Lewbel's heteroskedasticity instrument. We further investigate the factors influencing the effectiveness of CSR in protecting firm value, revealing that CSR activities focused on shareholder responsibility are particularly effective. This protective effect is most pronounced in firms facing poorer financial conditions, lower proportions of institutional investors, heightened industrial competition, and those not operating in socially sensitive industries. Overall, our findings provide evidence that active engagement in CSR can enhance a company's resilience to negative shocks during global health crises.

Corporate social responsibility and external disruptions

We propose that corporate social responsibility (CSR) investment serves as an intangible investment in stakeholder relationships to guard against external disruptions to firms' operations and tangible assets. Using a difference-in-differences setting and a database of factory locations, we show that manufacturing firms with higher CSR ratings are much less affected by major natural disasters in terms of operating performance. We then propose two mechanisms through which CSR engagement shields manufacturing firms against external disruptions: employee motivation and customer loyalty. Empirical evidence suggests that CSR helps manufacturing firms survive major natural disasters by motivating employees, which leads to higher post-disaster productivity, and keeping customers, which leads to more stable post-disaster sales.

Coordination of a socially responsible two-stage supply chain under random yield and demand

This study integrates corporate social responsibility (CSR) and channel coordination in a supply chain (SC) under random yield and random demand. In the SC, a supplier with random yield determines wholesale price and production input, and a producer with CSR decides order quantity and CSR investment facing CSR-related random demand. For centralized SCs with and without CSR, we prove the unimodality of the expected profits of the SCs for generic random yield and demand, and show the uniqueness of optimal ratio of order quantity to production input quantity. We disclose that the optimal expected profit of the SC with CSR is larger than that of the SC without CSR, and the profit difference increases with CSR effort and expected yield. We also find that the optimal CSR investment increases with the expected yield. Subsequently, the Nash equilibrium solutions of decentralized SCs under wholesale price and revenue-sharing contracts are analyzed. Next, we present a revenue and CSR sharing contract to realize channel coordination and win-win of SC members and related stakeholders. Lastly, we verify theoretical statements of centralized and decentralized SCs versus three numerical examples, and present managerial insights for the effect of yield uncertainty and CSR effort.

Motivating Corporate Social Responsibility Investment and Social Impact through Relative Performance Information

ABSTRACT Firms often struggle to motivate managers’ CSR performance, and little attention has been paid to how performance evaluation can assist in this effort. We address this gap by examining the effects of relative performance information (RPI) on risky CSR investment decisions. Compared to when no RPI is provided, we find that providing RPI based on the size or impact rate of CSR investments improves performance on the ranked dimension, although effects are weaker in more risk-averse managers. We also find that providing both types of RPI separately may lead to similar performance as providing just one type, and that RPI based on a single composite measure that combines performance dimensions leads to the greatest performance along each dimension. Our study contributes to research and practice by identifying how RPI can motivate larger, more impactful CSR investments and by highlighting the role that managers’ risk preferences can play in these decisions. Data Availability: Data are available upon request.

Terrorist Attacks, Corporate Social Responsibility, and Firm Value

Synopsis Research problem According to the World Economic Forum, terrorism is one of the main managerial concerns for companies worldwide. However, there is surprisingly scant research on how terrorist attacks impact managerial decision-making. To fill this gap, we investigate how terrorist attacks influence firms’ socially oriented activities, as measured by their investments in corporate social responsibility (CSR). Motivation or theoretical reasoning In light of the crucial role of CSR in financial markets and the growing apprehension regarding terrorism risk, this study explores whether and to what extent firms’ CSR investments contribute to the resilience to terrorism risk. The motivation for our research question is grounded in the idea that terrorist attacks create a unique set of circumstances that prompt firms to reconsider their socially oriented initiatives. We argue that firms impacted by such events tend to recognize the importance of demonstrating commitment to social responsibility in the aftermath of a crisis. Overall, the theoretical underpinnings of this study revolve around the notion that CSR becomes a strategic response for firms affected by terrorism, through which they address various stakeholder concerns, maintain legitimacy, and strategically manage their public image in the aftermath of a crisis. The test hypotheses We empirically examine two key research questions in this study. First, we examine the effect of terrorist attacks on the CSR investments of publicly traded firms. Second, we examine whether and how the increase in CSR investments of publicly traded firms after terrorist attacks affects firm value. Target population Our study extends the limited research on the impact of terrorism on capital markets, which is an area of great concern to various stakeholders, including shareholders and corporate managers. The findings will also help researchers understand the determinants of CSR and the potential channels through which CSR creates value for shareholders. Adopted methodology Using a multivariate regression model and controlling for all other determinants of corporate CSR investment documented by prior studies, we test the effect of terrorist events on firms’ CSR investment. To reduce the concern that a growing awareness of the importance of CSR may explain the changes in firms’ investment in CSR over time, we use a difference-in-differences research design. Analyses Using a sample of 53 major terrorist attacks occurring in the U.S. between 1994 and 2015, this study examines the causal effect of terrorist attacks on firms’ CSR activities. Findings Our findings indicate that public firms located in close proximity to terrorist attacks (i.e., the impact firms) substantially increase their investment in CSR following those terrorist events, and that the increase in CSR investment is positively associated with firm value. We further observe a strengthened association between increased CSR and firm value when the CSR efforts of the impact firms attract greater media attention. In conclusion, our findings substantiate the hypothesis that firms exposed to higher levels of terrorism risk are more inclined to enhance their CSR investments. This inclination is driven by the dual impact of CSR efforts: not only do they contribute to bolstering stakeholders’ confidence in firms’ future performance, but they are also linked to increased returns in the aftermath of a terrorist attack.

INVESTING IN OUR ROOTS: A STUDY OF CSR ALLOCATION FOR HERITAGE, ART AND CULTURE BY PSUS AND NON-PSUS

This research paper explores the corporate social responsibility (CSR) spending patterns of public sector undertakings (PSUs) versus non-public sector undertakings (non-PSUs) companies in India, specifically focusing on contributions towards heritage, art, and culture. The study utilizes data from the National CSR portal, covering the period from 2017-‘18 to 2021-‘22. The analysis reveals that non-PSUs consistently demonstrate higher average contributions to heritage, art, and culture than PSUs. However, the spending patterns show significant year-on-year variability for both sectors, with PSUs exhibiting more fluctuation. The findings underscore the need for more strategic and consistent CSR investments in heritage, art, and culture, particularly among PSUs. The paper concludes with recommendations for policy measures to enhance corporate contributions to preserving and promoting India's rich cultural heritage.

If the wind blows, adjust your sail: Political ideology, social responsibility, and performance

Drawing on the upper echelons theory and the attention theory, this study investigates the influence of a chief executive officer's political beliefs on the market value generated by corporate social responsibility investments. The empirical analysis on U.S. hotel companies over a 25-year period (1998–2022) reveals that greater misalignment between a chief executive officer's ideology and the national political climate leads to a weaker impact of corporate social responsibility-related activities on the market value. This result is significant because it suggests that chief executive officers' actions are not solely determined by their ideological stance—as the upper echelons theory predicts—but rather by the conflict they experience when the external environment contradicts their ideological beliefs, which is a theoretical extension.

Corporate Social Responsibility, Ownership Structure, and Firm Investment Efficiency: Evidence from the Saudi Stock Market

This study investigates the relationship between corporate social responsibility (CSR), ownership structure, and investment efficiency in the Saudi stock market. Analyzing data from non-financial companies listed on the Saudi Stock Exchange (Tadawul) from 2016 to 2021, the findings revealed that higher CSR disclosures were positively associated with investment efficiency. Additionally, the study found that firms with higher levels of institutional, family, or foreign ownership demonstrated more efficient investment practices. However, the study did not support the moderation effect of ownership structure on the CSR–investment efficiency nexus. These results remain robust across different alternative measures and methods. This research fills a gap in the literature by examining these relationships in an emerging market with unique governance and ownership structures. Specifically, it extends the understanding of the CSR–investment efficiency nexus beyond developed economies to include the developing context of Saudi Arabia. Furthermore, the study highlights the varying effects of different ownership structures on investment efficiency and provides a detailed analysis of how investor types respond to CSR disclosures, revealing differences from established CSR frameworks in developed markets. The study’s results offer new insights for investors, policymakers, and regulators, and open avenues for further research for academics and business professionals.

Social responsibility and corporate borrowing

We study the impact of social capital, measured by corporate social responsibility (CSR) performance, on corporate borrowing. Using a sample of 120,204 bank loan applications of China's listed firms, we find that an increase in CSR performance increases the loan amounts of approved loans, although it does not alter the likelihood of loan approval. Using aggregate loans at the firm level, we show that CSR performance positively impacts firms' long-term borrowing from banks but does not affect their short-term borrowing. The economic magnitude of the positive effect is large at both the loan and firm levels. We attribute this positive relationship to reduced information asymmetry and improved risk mitigation. Surprisingly, we find that banks do not discipline their borrowers' CSR investments through the lending relationship. Specifically, when borrowers exhibit high CSR performance and borrow from banks with high CSR performance, further increases in CSR no longer correlate with larger loan amounts. Our findings suggest that China's state-led green credit policies should be more market-oriented.

Corporate social responsibility and corporate investments: does research and development intensity matter?

Corporate social responsibility and corporate investments: does research and development intensity matter?

Corporate social responsibility and firm value: exploring the moderating effects of information technology-enabled knowledge capabilities

PurposeA substantial amount of research has examined the firm value impact of corporate social responsibility (CSR). Nevertheless, the findings have been inconsistent, prompting researchers to identify contingencies under which the impact varies. This study examines how information technology (IT)-enabled knowledge capabilities moderate the relationship between CSR and firm value.Design/methodology/approachWe conducted the ordinary least squares (OLS) regression analysis on a sample of S&P 500 companies spanning from 2010 to 2017. We employed additional methods to test the robustness of the results, including the generalized method of moments (GMM) estimator and the two-stage least squares (2SLS) method.FindingsThe results show that IT-enabled absorptive capability (IT-AC) and IT-enabled social integration capability (IT-SIC) positively moderate the CSR–value relationship. Further, their moderating effects vary in distinct ways when environmental dynamism changes, hinting at the distinct underlying rationales behind the moderating roles of IT-AC and IT-SIC.Research limitations/implicationsThis study improves the understanding of the business value of CSR and IT. It has limitations in generalizability due to the use of secondary data.Practical implicationsThis study provides practical guidelines to managers about how to strategically leverage IT resources for the creation of CSR value.Social implicationsEncouraging businesses to enhance their CSR efforts and uphold sustainability extends beyond our immediate benefit and impacts future generations as well. However, due to an imbalance between costs and returns, companies often refrain from being wholeheartedly devoted to CSR. Our insights on guiding companies to derive more value from CSR can inspire their greater investment in CSR. Meanwhile, companies can obtain additional returns from deployed IT.Originality/valueThis study extends the IT business value literature by revealing how IT generates firm value in the context of CSR. It also adds critical insights into the mixed findings in previous research regarding the CSR–firm value link. The study’s findings offer useful guidance on the strategic deployment and utilization of IT resources to facilitate the creation of CSR value.

The economic impacts of social activism and corporate social responsibility on food fraud.

The study examines the relationship between the corporate social responsibility (CSR) investments of a food firm, an activist's incentive to target the firm to uncover and deter fraudulent behavior, and the firm's incentive to commit food fraud. Specifically, we develop a game theoretic model to analyze the strategic interaction between a food firm that decides whether to provide a credence food attribute and whether to misrepresent the quality of its product, and an activist who decides whether to monitor the firm and launch a campaign to uncover and remove false/misleading quality claims. We further examine the effect of CSR and the activist's presence on the level of quality the firm provides. We derive the conditions under which an activist will find it optimal to monitor the firm to uncover fraudulent quality claims and the firm will find it optimal to misrepresent its product quality. Analytical results show that the greater the firm's CSR investments, the less likely it is that the activist will find it optimal to monitor the firm, and the more likely it is that the firm will find it optimal to misrepresent its product quality. Results also show that the firm is more likely to misrepresent its product quality when its effectiveness in contesting the activist's campaign is relatively high, and more likely to actually provide a high-quality product when the cost of the credence attribute is relatively low.

Impact of Organizational Culture on The Level of Corporate Social Responsibility Investments: An Exploratory Study

Impact of Organizational Culture on The Level of Corporate Social Responsibility Investments: An Exploratory Study

A Conceptual Framework on Enhancing Corporate Immunity Under The Influence of Corporate Social Responsibility And Financing Strategies

Existing research mainly focused on the financial implications of corporate social responsibility (CSR) on firms, overlooking the firm’s intrinsic intention to invest in CSR as to whether the investment is taken to build immunity against shocks or to strategize for future corporate exercises. As such, this paper provides a framework to investigate whether there is any association between CSR investments, firm performance and financing strategies. This paper hypothesized that there is a joint impact of CSR investments and financing strategy as a means to build stronger sustainable corporate immunity. The findings of this framework will assist managers in discerning whether there is a key CSR-ESG orientation that assists firms in future corporate funding exercises and to structure its CSR investments jointly with financing strategy to build stronger immunity.

Are corporate social responsibility and environmental management ‘influencers’ of performance in companies of the energetic sector?

AbstractPrior research has suggested that Corporate Social Responsibility (CSR) may affect Environmental Management (EM). Nevertheless, there has been a lack of empirical studies that have examined these relationships, specially, in companies of the energetic field. This research empirically examines whether there is a positive relationship between the implementation of a CSR culture in a company and the obtaining of better Operational Performance, as well as between CSR and EM processes and also between EM and Operational Performance. The analysis of the results obtained through the Partial Least Squares (PLS) methodology concludes that there is a positive relationship between all of them, including this paper a main contribution to Literature as it is the fact that EM plays a mediator role increasing the CSR impact over Operational Performance. The major implication derived from this study is that investments in CSR and EM practices towards all the company stakeholders should positively affect performance. Therefore, both should be equally as important as other functions of a firm.

Corporate social responsibility and labor investment efficiency: evidence from China

PurposeWe expect to provide a complete theoretical framework and large sample evidence on the impact of corporate social responsibility (CSR) on the efficiency of labor investment. We also hope to provide micro-evidence based on labor investment behavior for the two-sided impact of corporate CSR behavior.Design/methodology/approachThis paper measures labor investment efficiency by estimating the difference between actual and expected net hiring of enterprises. CSR is measured on the basis of the CSR score of Chinese listed companies published by Hexun.com. A regression model is constructed to analyze the relationship between CSR and labor investment efficiency. Possible endogeneity problems are controlled by lagging independent variables, propensity score matching method and difference-in-difference method.FindingsResults show that CSR can improve labor investment efficiency by reducing over-hiring and under-hiring in emerging markets. The existence of the mediating effect of agency cost, information disclosure quality and employment fluctuation confirms that CSR improves labor investment efficiency through two mechanisms of corporate governance and labor market friction. The improvement effect of CSR on labor investment efficiency is more significant in non-state-owned, high CEO shareholding ratio and high-average urban wage enterprises.Originality/valueIn conclusion, our study is an important supplement to the existing research on the factors affecting labor investment efficiency. Our research conclusions will be helpful for enterprises in developing countries or enterprises in labor-intensive industries to improve labor investment inefficiency. The conclusion of the mechanism analysis in this paper provides more complete and reliable microscopic evidence for accurately identifying the specific path of CSR's impact on labor investment efficiency. This paper verifies the positive impact of CSR from the perspective of labor investment efficiency in the context of a developing country, which provides evidence for the theoretical conflicts related to CSR based on the effectiveness of enterprise labor investment decisions.

HOW DOES CSR STRATEGY IMPACT CORPORATE CASH POLICY IN EMERGING MARKETS? EVIDENCE FROM THE COVID-19 OUTBREAK

This study investigates the impact of corporate social responsibility (CSR) strategy on corporate cash policy in emerging markets, with a specific focus on the COVID-19 pandemic period. By analysing data from 7,731 firm-years across 30 developing countries during the period 2002-2021, the study finds that CSR has a negative effect on cash holdings. In other words, firms with lower CSR investment tend to hold more cash. However, an interesting finding is that the negative impact of CSR on cash holdings lost its significance during the COVID-19pandemic. This suggests that during this unprecedented period of economic uncertainty and disruption caused by the pandemic, firms with higher CSR were more inclined to hoard cash as a precautionary measure. In contrast, in normal times, the dominant motive for holding cash appears to be related to agency concerns. Furthermore, the study identifies countryspecific variations in the relationship between CSR and cash holdings. For instance, firms in Brazil and Saudi Arabia tend to use cash retention as a response to higher CSR, while firms in Argentina, Malaysia, Mexico, Poland, Taiwan, and Turkiye exhibit the opposite behaviour, using higher CSR as a signal for reduced cash holdings. Additionally, the study sheds light on industry-specific differences in the relationship between CSR and cash holdings. Beverage, construction and material, industrial material, oil, gas, and coal, technology hardware and equipment, telecommunications service provider, and travel and leisure firms are more likely to use cash holdings as a substitute for CSR, while alternative energy and media firms show the opposite pattern, using higher CSR as a signal for reduced cash holdings.

Beauty premium: the impact of CEO facial attractiveness on corporate social responsibility

Purpose Face is the most intuitive and representative feature at the individual level. Many studies show that beautiful faces help individuals and enterprises obtain economic benefits and form a high economic premium, but the discussion of their potential social value is insufficient. This study aims to focus on the impact of the personal characteristics of executives. It mainly analyzes the impact mechanism of CEO facial attractiveness on corporate social responsibility (CSR) decision-making, clarifying the social value of beauty from the perspective of CSR. Design/methodology/approach The authors use the regression model to analyze the panel data set, which was conducted by a sample of Chinese publicly listed firms from 2016 to 2018. Findings The study found that CEOs with high facial attractiveness are more active in fulfilling CSR, which can usually bring higher social benefits. CEOs with beautiful faces are prone to overconfidence, are optimistic about their ability and the future development of the enterprise and are more willing to increase their investment in CSR. CEO duality can positively regulate the positive correlation between a CEO’s facial attractiveness and CSR. Originality/value Based on the perspective of upper echelons theory, this paper explores the mechanism of CEO facial attractiveness on CSR. This study enriches the perspective of the upper echelon’s theoretical research and has essential enlightenment for CEO selection and training practice.

Disclosing Corporate Social Responsibility Affects Company Value: Profitability as Moderating Variable

The goal of this research is to determine how company value is impacted by corporate social responsibility (CSR) and how profitability, as determined by the rate of return on assets (ROA), modifies this impact. The main reason is that businesses which can disclose their CSR will garner greater public attention. Purposive sampling was employed in this study, consisting of all businesses listed on the Indonesia Stock Exchange (IDX) during 2018 to 2022. Because relatively few organizations are prepared to participate in CSR due to the significant expenditures involved, the paper’s findings show that CSR Disclosure does not significantly affect company value. The second finding stated that profitability as defined by return on assets (ROAt) can enhance the interaction among CSR disclosure and company value because profitable businesses can afford to make larger investment in CSR, which can best serve stakeholders who are essential to the business’s longevity.

Do Hofstede’s cultural dimensions moderate the CSR-firm performance relationship before and during the COVID-19 crisis?

Purpose This study aims to evaluate the impact of varying cultural dimensions, according to Hofstede, on corporate social responsibility (CSR) performance before and during the COVID-19 crisis. Design/methodology/approach This study examines the moderating impact of Hofstede’s cultural dimensions on the relationship between CSR and firm performance. The database comprises 36,295 firm-year observations from 2,135 firms operating in civil law countries. Findings The findings confirm that CSR investments have a positive impact on firm performance both before and after the COVID-19 crisis. Furthermore, it becomes evident that cultural dimensions play a moderating role in the CSR–firm performance relationship. The crisis has generated a shift in perspective, emphasizing the advantages of CSR in terms of reputation and financial well-being in the post-crisis environment. Originality/value The significance of this study lies in its examination of the relationship between CSR and firm performance within the framework of Hofstede’s cultural dimension theory, before and during the COVID-19 crisis.