Social Performance and Firm Risk: Impact of the Financial Crisis

Kais Bouslah (), Lawrence Kryzanowski and Bouchra M’Zali
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Kais Bouslah: University of St Andrews
Lawrence Kryzanowski: Concordia University
Bouchra M’Zali: Université du Québec à Montréal

Journal of Business Ethics, 2018, vol. 149, issue 3, No 7, 643-669

Abstract: Abstract This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm’s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.

Keywords: Financial crisis; Volatility; Idiosyncratic risk; Social performance; Strengths; Concerns (search for similar items in EconPapers)
JEL-codes: G32 M14 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (85)

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DOI: 10.1007/s10551-016-3017-x

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