Does Corporate Social Responsibility Impact Risk?

Relationship between Environmental Financial Accounting Practices and Corporate Financial Risk: Evidence from Listed Companies in Vietnams Securities Market

“…Mixed results are seen in the studies on research stock market efficiency of social responsibility shares. Monti et al (2018) carried out a study based on a large panel of listed firms from 52 countries for the period 2002-2015. It used GMM estimators that allowed considering both autoregressive memory in risk measures and possible endogeneity of CSR.…”

“…Similar benefits apply to firms that are not cross-listed but a financial crisis increases the risk-reducing effect of CSR. Monti et al (2018) also examined the relationship between corporate social responsibility and company value (a system risk measured by CAPM model), and concluded that investment in social responsibility can bring financial benefits to the company as well as better long-term growth prospects. For example, waste reduction companies will avoid consumer disaster / litigation / boycott, and thus increase their brand value and prestige, or increase motivation of their workers and their wealth and enhance customer attraction and retention.…”

“…Recent empirical studies have found a negative correlation between corporate social responsibility and corporate financial risk. The study of Monti et al (2018) for instance, viewed that social responsibility is associated with reduced systematic risk. Harjoto and Laksmana (2016) showed that improved environmental risk management is associated with lower capital costs and especially lower equity cost.…”

“…Therefore, these companies usually have lower accounting and market risks. Monti et al (2018) argued that when a company participates in social responsibility, it maximizes shareholder value, enhances its credibility, and ensures long-term viability. Therefore, investors and managers of companies must pay attention to CSR activities in developing their investment strategies and regulatory policies.…”

CSR and banking soundness: A causal perspective

“…In the wide diversity of research articles addressing the issue of sustainability, the key question that arises repeatedly is the correlation between social performance (CSP) and financial performance (FP) (Adegbite, Guney, Kwabi, & Tahir, 2019; Makni, 2009; Orlitzky, Louche, Gond, & Chapple, 2017; Simpson & Kohers, 2002; Wang, Lu, Ye, Chau, & Zhang, 2016a; Wang, Dou, & Jia, 2016b; Zhao & Murrell, 2016). Another recent question less discussed in the literature concerns the correlation between CSR and risk (Albuquerque, Koskinen, & Zhang, 2019; Chollet & Sandwidi, 2018; Monti, Pattitoni, Petracci, & Randl, 2019). Many researchers agree on the importance of CSR, and have shown that CSR strategies lead to higher firm value (Harjoto & Laksmana, 2018; Jadiyappa, Iyer, & Jyothi, 2019; Jo & Harjoto, 2011; Servaes & Tamayo, 2013), reduced risks (Cuesta‐González, Muñoz‐Torres, & Fernández‐Izquierdo, 2006), and lower cost of capital (El Ghoul, Guedhami, Kwok, & Mishra, 2011; Nandy & Lodh, 2012).…”