Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis

Karl Lins, Henri Servaes and Ane Tamayo

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: During the 2008-2009 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High-CSR firms also experienced higher profitability, growth, and sales per employee relative to low-CSR firms, and they raised more debt. This evidence suggests that the trust between the firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock.

Keywords: trust; social capital; corporate social responsibility; financial crisis; stock returns (search for similar items in EconPapers)
JEL-codes: D64 G30 M14 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-08-14
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (708)

Published in Journal of Finance, 14, August, 2017, 72(4), pp. 1785 - 1824. ISSN: 0022-1082

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http://eprints.lse.ac.uk/68059/ Open access version. (application/pdf)

Related works:
Journal Article: Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:68059

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