Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy

Daoju Peng, Gonul Colak and Jianfu Shen

Journal of Corporate Finance, 2023, vol. 79, issue C

Abstract: We examine the effect of policy uncertainty on firms' strategy of corporate social responsibility (CSR). During uncertain times, firms strategically increase their commitment to CSR causes. Policy uncertainty is positively associated with CSR performance regardless of the estimation method. CSR strategy can substitute for lobbying when firms attempt to manage policy uncertainty. Improved CSR performance can reduce firms' exposure to policy uncertainty which indicates that CSR commitment can deliver insurance-like benefits. The findings highlight the value of CSR commitments during uncertain times.

Keywords: Corporate social responsibility (CSR); Policy uncertainty; Gubernatorial election; Hedging strategy (search for similar items in EconPapers)
JEL-codes: D80 G30 G32 G38 M14 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:79:y:2023:i:c:s0929119923000251

DOI: 10.1016/j.jcorpfin.2023.102376

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