Natural disasters and CSR: Evidence from China

Zhongda He, Biao Guo, Yukun Shi and Yang Zhao

Pacific-Basin Finance Journal, 2022, vol. 73, issue C

Abstract: Using detailed natural disaster data and a sample of Chinese listed firms over the period 2011–2019, we examine the link between natural disasters and firms' corporate social responsibility (CSR) performance. We find that both the presence of a severe natural disaster and the number of disaster categories are significantly associated with higher CSR activities in the affected area. Next, we explore why firms are motivated to increase their CSR engagement in the disaster area. Our empirical evidence shows that state ownership, political connections, and institutional ownership are the main driving forces that spur CSR activities in the disaster area. Moreover, large firms and firms with high financial constraints are more motivated to increase their immediate CSR activities following natural disasters. We also find that CSR activities during the disaster period reward firms with better future accounting and stock market performance than those in the non-disaster period. Overall, our findings suggest that state ownership, political connections, institutional ownership, and future firm performance create incentives for firms to enhance CSR investments following natural disasters.

Keywords: Natural disasters; CSR, state ownership; Political connection; Financial performance (search for similar items in EconPapers)
JEL-codes: G23 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000725

DOI: 10.1016/j.pacfin.2022.101777

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