Multi-dimensional corporate social responsibilities and stock price crash risk: Evidence from China

Fangzhao Zhou, Jichen Zhu, Yawei Qi, Jun Yang and Yunbi An

International Review of Financial Analysis, 2021, vol. 78, issue C

Abstract: Worldwide, there has been an ongoing debate about whether corporate social responsibility (CSR) can lead to better financial market performance, or whether corporations can do well by doing good. Working with a sample of all listed companies in China from 2010 to 2017, this study examines the impacts of three dimensions of CSR on stock price crash risk. We find that CSR, especially firms' responsibility to the environment and stakeholders, significantly reduces stock price crash risk, while social contributions such as charitable donations have no significant effect on stock crash risk. Attracting long-term institutional investors is the primary mechanism through which CSR can curb crash risk. Mitigating earnings management is also a channel through which overall CSR and stakeholder responsibility contribute to a lower stock crash risk. Finally, we find that stakeholder responsibility and environmental responsibility can help improve stock market performance.

Keywords: Corporate social responsibility; Stock price crash risk; Stakeholder responsibility; Environmental responsibility (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:78:y:2021:i:c:s1057521921002520

DOI: 10.1016/j.irfa.2021.101928

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