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From Corporate Social Responsibility to Stock Price Crash Risk: Modelling the Mediating Role of Firm Performance in an Emerging Market

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  • Cao Thi Mien Thuy

    (Faculty of Finance and Banking, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

  • Trinh Quoc Trung

    (Faculty of Finance and Banking, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

  • Nguyen Vinh Khuong

    (Vietnam National University, Ho Chi Minh City 700000, Vietnam
    Faculty of Accounting and Auditing, University of Economics and Law, Ho Chi Minh City 700000, Vietnam)

  • Nguyen Thanh Liem

    (Faculty of Finance and Banking, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

Abstract

The literature on the link between corporate social responsibility (CSR) disclosure and stock price crash risk suggests that it is far more complicated than a plain one-to-one relationship. In this study, we examine how CSR disclosure affects the stock price crash risk and whether firm performance acts as a mediating variable in this relationship. The CSR disclosure index is built using the content analysis technique and the GRI criteria. We choose 225 businesses in Vietnam, comprising 159 firms listed on HOSE and 66 firms listed on HNX. Using the techniques of OLS, LOGIT, GMM, and the Sobel test and replacing different measures of dependent and mediator variable to enhance the robustness of our findings, we reach two important results. To begin with, CSR disclosure has a negative influence on the stock price crash risk of Vietnam’s listed firms. Second, in the aforementioned relationship, firm performance serves as an intermediate. Our results imply that listed firms should engage in CSR practices and disclosure in order to raise the firm’s performance and lower the stock price crash risk.

Suggested Citation

  • Cao Thi Mien Thuy & Trinh Quoc Trung & Nguyen Vinh Khuong & Nguyen Thanh Liem, 2021. "From Corporate Social Responsibility to Stock Price Crash Risk: Modelling the Mediating Role of Firm Performance in an Emerging Market," Sustainability, MDPI, vol. 13(22), pages 1-17, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:22:p:12557-:d:678649
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