Download This PaperThe Value of CSR During the Covid-19 Crisis: Evidence from Chinese Firms
47 Pages Posted: 16 Jan 2022
Abstract
Using a sample of 3,016 Chinese listed firms, we study the impact of Chinese firms' corporate social responsibility (CSR) engagement on their stock returns during the COVID-19 crisis. We find that firms with more pre-crisis CSR engagement have worse crisis-period stock returns. The effect is larger for firms with more agency problems, less access to external financing, or worse pre-crisis financial conditions. Firms with more pre-crisis CSR engagement also show poorer post-crisis operating performance. Our results suggest that agency problems motivate Chinese managers to overinvest in costly CSR practices, which harms firm value during the unexpected crisis and impede the firm's recovery from it.
Keywords: corporate social responsibility, COVID-19 crisis, Stock returns, Agency problems, China
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