Social Capital, Trust, and Corporate Performance: How CSR Helped Companies During the Financial Crisis (and Why It Can Keep Helping Them)
Karl Lins,
Henri Servaes and
Ane Tamayo
Journal of Applied Corporate Finance, 2019, vol. 31, issue 2, 59-71
Abstract:
The authors summarize the findings of their study, published recently in the Journal of Finance, that shows that CSR investments can help companies when they perhaps need it most—that is, during sharp downturns when overall trust in companies and markets declines. Companies with high‐CSR rankings experienced stock returns that were five to seven percentage points higher than their low‐CSR counterparts during the 2008–2009 financial crisis, and even larger excess returns during the Enron crisis of 2001–2003. High‐CSR companies during the crisis also reported better operating performance, higher growth, higher employee productivity, and greater access to debt markets—while continuing to generate higher shareholder returns as late as the end of 2013. Many of these operating improvements continued well into the post‐crisis period, though at more modest levels. As the authors view their findings, the ‘social capital’ built up by corporate CSR programs complements effective financial capital management in increasing shareholder wealth mainly by limiting companies' downside risk. CSR is seen as not only reducing systematic as well as firm‐specific risk, but as also providing protection against overall ‘loss of trust.’ The social capital created by CSR programs is said to provide a kind of insurance policy that pays off when investors and the overall economy face a severe crisis of confidence.
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (14)
Downloads: (external link)
https://doi.org/10.1111/jacf.12347
Related works:
Working Paper: Social capital, trust, and corporate performance: how CSR helped companies during the financial crisis (and why it can keep helping them) (2019) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:jacrfn:v:31:y:2019:i:2:p:59-71
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1078-1196
Access Statistics for this article
Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr.
More articles in Journal of Applied Corporate Finance from Morgan Stanley
Bibliographic data for series maintained by Wiley Content Delivery ().