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Corporate social responsibility, financial performance and risk in times of economic instability

Author

Listed:
  • Eric Braune

    (INSEEC U Research Center–SBE)

  • Pablo Charosky
  • Lubica Hikkerova

    (IPAG Business School)

Abstract

This article examines the relationship between the social performance of companies and their financial performance, analyzed from the systematic risk perspective. The analysis is divided into two parts. We first investigate the relationship between the social performance of companies and their systematic risk. We then look at the link between social performance and the performance of the securities of the company. The empirical results show a negative relationship between social performance and systematic risk, resulting in a higher profitability of securities of high social performance in times of instability and depression in financial markets. The implementation of social responsibility strategies can therefore be regarded as insurance to limit sensitivity to systematic risk and preserve the value of the shareholders against the adverse effects of a crisis or bad economic conditions.

Suggested Citation

  • Eric Braune & Pablo Charosky & Lubica Hikkerova, 2019. "Corporate social responsibility, financial performance and risk in times of economic instability," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(4), pages 1007-1021, December.
    • Handle: RePEc:kap:jmgtgv:v:23:y:2019:i:4:d:10.1007_s10997-019-09476-y
    DOI: 10.1007/s10997-019-09476-y
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    References listed on IDEAS

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    2. Liu, Kai & Wang, Jiang & Liu, Liqun & Huang, Yingjun, 2023. "Mixed-ownership reform of SOEs and ESG performance: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1618-1641.
    3. Salma Zaiane & Dorra Ellouze, 2023. "Corporate social responsibility and firm financial performance: the moderating effects of size and industry sensitivity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(4), pages 1147-1187, December.
    4. Charl de Villiers & Jing Jia & Zhongtian Li, 2022. "Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4523-4568, December.
    5. Ivo Hristov & Antonio Chirico & Francesco Ranalli, 2022. "Corporate strategies oriented towards sustainable governance: advantages, managerial practices and main challenges," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(1), pages 75-97, March.
    6. Asif Saeed & Robert Sroufe, 2021. "Performance, Risk, and Cost of Capital: Trends and Opportunities for Future CSR Research," JRFM, MDPI, vol. 14(12), pages 1-20, December.

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