Corporate Social Responsibility and Firm Liquidity Risk: U.S. Evidence

Hong Zhao, Zixuan Jiao, Jianrong Wang and Amina Kamar
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Hong Zhao: School of Management, Xi’an Jiaotong University, Xi’an 710049, China
Zixuan Jiao: Stuart School of Business, Illinois Institute of Technology, Chicago, IL 60616, USA
Jianrong Wang: Faculty of Economics and Management, East China Normal University, Shanghai 200062, China
Amina Kamar: Maroun Semaan Faculty of Engineering and Architecture, Department of Electrical and Computer Engineering, American University of Beirut, Beirut 1107 2020, Lebanon

Sustainability, 2021, vol. 13, issue 22, 1-16

Abstract: In this study, we empirically investigate whether and to what extent corporate social responsibility (CSR) may affect firm liquidity risk. We define liquidity risk as the covariance between market-wide liquidity shocks and individual firms’ stock returns and employ two methods to estimate firm liquidity risk. We find a negative association between CSR and firm liquidity risk after controlling for various firm characteristics, i.e., year and industry fixed effects. Our results are robust to possible endogeneity issues when we adopt two-stage lease square estimator and dynamic GMM estimator. In addition, we document that the negative relation between CSR and firm liquidity risk is more pronounced when firms have higher reliance on external financing.

Keywords: liquidity risk; liquidity; corporate social responsibility; systematic risk (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:22:p:12894-:d:684614

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