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Effect of managerial ability toward corporate social responsibility on enterprise default risk

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  • Chen, Huihui
  • Ho, Kung-Cheng
  • Zhang, Ming
  • Zhang, Qidi

Abstract

In this study, we explore the effect of managerial ability toward corporate social responsibility (CSR) on enterprise default risk. We observe a negative correlation between CSR and enterprise default risk. Furthermore, we introduce managerial ability and analyze its effects on the default risk of enterprises with regard to implementing the CSR strategy. Studies have revealed that CEOs with higher managerial abilities can effectively capture the advantages of CSR. Our findings are robust to alternative variable measurements. In conclusion, the higher managerial ability is key proof of the effectiveness of CSR, which reduces default risk, especially during economic uncertainty. Our evidence on the effects of managerial ability toward CSR on enterprise risk default has important implications for practitioners and regulators.

Suggested Citation

  • Chen, Huihui & Ho, Kung-Cheng & Zhang, Ming & Zhang, Qidi, 2023. "Effect of managerial ability toward corporate social responsibility on enterprise default risk," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323000740
    DOI: 10.1016/j.frl.2023.103700
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    Cited by:

    1. Huang, Xue & Wang, Zhibin, 2024. "Does minority shareholder activism impede corporate default risk? Evidence from China," Finance Research Letters, Elsevier, vol. 61(C).
    2. Liu, Xinghe & Zhong, Weifeng & Chen, Jing, 2023. "Stay home, stay safe: CEO hometown identity and default risk," Finance Research Letters, Elsevier, vol. 57(C).
    3. Liu, Zhonglu & Pang, Tengfei & Sun, Haibo, 2024. "Decarbonization policy and high-carbon enterprise default risk: Evidence from China," Economic Modelling, Elsevier, vol. 134(C).
    4. Karpenko Oksana & Krylov Denys & Boniar Svitlana & Shepelenko Svitlana & Yermakov Maksym, 2024. "Formation of the Management Mechanism of the Corporate Social Responsibility of the Enterprise," Management Theory and Studies for Rural Business and Infrastructure Development, Sciendo, vol. 46(1), pages 85-92, March.

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    More about this item

    Keywords

    CEO; Managerial ability; Corporate social responsibility; Risk default;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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