Does the Shield Effect of CSR Work in Crises? Evidence in Korea

Fariha Jahan and Jungmu Kim ()
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Fariha Jahan: School of Business, Yeungnam University, Gyeongsan 38541, Republic of Korea
Jungmu Kim: School of Business, Yeungnam University, Gyeongsan 38541, Republic of Korea

Sustainability, 2023, vol. 15, issue 11, 1-18

Abstract: This paper investigates the impact of corporate social responsibility (CSR) on shareholders’ wealth during market downturn, focusing on the market crash caused by the COVID-19 pandemic and its aftermaths. We evaluate the relationship between firms’ CSR and stock returns using a sample of 803 firms listed on the Korean stock market. The results of our study reveal that firms’ pre-crisis CSR activities do not protect shareholders’ wealth during the crisis; in fact, they negatively affected stock returns during the COVID-19 crisis. This finding is consistent across several robustness tests and challenges the prevailing notion that CSR is solely a philanthropic endeavor. This study suggests that firms need to reconsider their CSR approach in order to better align it with shareholders’ interest.

Keywords: corporate social responsibility; ESG; COVID-19; stock performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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