Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence

Purpose This study aims to examine the effects of top management team (TMT) heterogeneity and corporate social responsibility (CSR) on the firm risk of Bursa Malaysia listed firms. Also, this study examines the moderating effect of CSR between TMT heterogeneity and firm risk. Design/methodology/approach This study uses panel regression models to test the hypotheses. The sample of this study is Bursa Malaysia non-financial listed firms from 2013 to 2017 with 3,055 observations. Findings This study finds significant effects of TMT age and tenure heterogeneities on total risk. Effects on idiosyncratic risk are evident only within age heterogeneity. Further, this study finds negative effects of CSR on total and idiosyncratic risks. CSR significantly moderates the relationship between total TMT heterogeneity and firm systematic risk. Practical implications This study reduces the literature gap by providing useful insights on the effects of CSR activities and TMT heterogeneity on firm risk. The findings can also provide hints to investors to assist them in assessing firm risk based on TMT heterogeneity and firms’ CSR. This study can also benefit shareholders in their attempts to mitigate the risk of their portfolio by investing in firms that are socially responsible as firms with high CSR suffer lower total and idiosyncratic risks. Originality/value Previous studies have emphasised on the influence of TMT characteristics and CSR on firm performance. However, studies that investigate the effects of TMT heterogeneity and CSR on firm risk are limited in the context of Malaysia.

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Firm characteristics, board diversity and corporate social responsibility

Pacific Accounting Review ◽

10.1108/par-01-2013-0007 ◽

2015 ◽

Vol 27 (3) ◽

pp. 353-372 ◽

Cited By ~ 42

Author(s):

Mohammad Badrul Muttakin ◽

Arifur Khan ◽

Nava Subramaniam

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Empirical Evidence ◽

Firm Characteristics ◽

Board Diversity ◽

Developing Nation ◽

Content Type ◽

Female Directors ◽

Csr Disclosure ◽

Corporate Social

Purpose – This study aims to purport to investigate the relationship between firm size, profitability, board diversity (namely, director gender and nationality) and the extent of corporate social responsibility (CSR) disclosures within a developing nation context. Design/methodology/approach – The dataset comprises 116 listed Bangladeshi non-financial companies for the period of 2005-2009. A CSR disclosure checklist was used to measure the extent of CSR disclosures in the annual reports and a multiple regression analysis to examine its association with firm characteristics and two board diversity features – female and foreign directorship. Findings – Results indicate that large and more profitable firms provide more CSR disclosures. It was also found that female directorship has a negative association with CSR disclosures, while foreign directorship has a positive impact on such disclosures. This paper documents that CSR disclosures decrease further when family ownership is higher and there are more female directors on the board. Originality/value – This study extends empirical evidence on the association between firm characteristics, board diversity and CSR disclosure practices from a developing nation context. Furthermore, this study also reveals that female directors’ impact on firm disclosures may differ between developing and developed nations, and somewhat impeded in the latter. This paper also provides empirical evidence on the importance of appointment of foreign nationals on the boards of developing countries to influence CSR practices.

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Corporate Social Responsibility Disclosure and Its Effect on Firm Risk: An Empirical Research on Vietnamese Firms

Sustainability ◽

10.3390/su132212933 ◽

2021 ◽

Vol 13 (22) ◽

pp. 12933

Author(s):

Cao Thi Mien Thuy ◽

Nguyen Vinh Khuong ◽

Nguyen Thanh Liem

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Voluntary Disclosure ◽

Emerging Market ◽

Listed Companies ◽

Policy Implications ◽

Firm Risk ◽

Research Perspective ◽

Csr Disclosure ◽

Corporate Social

The purpose of the study was to gather empirical evidence on the influence of corporate social responsibility (CSR) disclosure on firm risk of Vietnam’s publicly listed companies. We used adjusted OLS estimation and regression analysis with adjusted panel data for heteroskedasticity and/or autocorrelation to analyze the correlation using data from 225 listed companies on Vietnam’s stock market from 2014 to 2019. The study’s sample period is relatively recent in the emerging market, especially considering regulatory differences and the availability of voluntary disclosure requirements. The findings of research on the relationship between CSR and corporate risk are mixed, particularly in developing markets. Research findings reveal a negative and significant association between CSR and firm risk, implying that stronger CSR performance lowers a company’s risk. This aims to strengthen a research perspective of this connection in emerging countries. Following that, we discuss some policy implications for listed firms and regulators in CSR disclosure.

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The effect of corporate social responsibility on firm risk

Social Responsibility Journal ◽

10.1108/srj-08-2013-0093 ◽

2015 ◽

Vol 11 (2) ◽

pp. 324-339 ◽

Cited By ~ 18

Author(s):

Pascal Nguyen ◽

Anna Nguyen

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Positive Influence ◽

Employee Relations ◽

Fixed Cost ◽

Firm Risk ◽

Single Measure ◽

Content Type ◽

Aggregate Index ◽

Corporate Social

Purpose – The purpose of this paper is to investigate the link between corporate social responsibility (CSR) and risk for a sample of US firms rated by KLD. Design/methodology/approach – The authors’ approach involves three distinctive features. First, the authors use individual indicators of CSR to highlight which CSR dimension matters most for a firm’s risk. Second, the authors distinguish CSR strengths and concerns to reveal potentially nonlinear relationships. Third, the authors use a measure of risk that takes into account the predictable changes in a firm’s performance and that does not collapse the panel data into a single cross-section. This allows the CSR–risk relationship to be estimated by the variation within each firm and the variation across firms. Findings – Consistent with existing results, the authors find that CSR concerns relating to diversity, employee relations and corporate governance increase the risk to shareholders. More interestingly, the authors show that CSR strengths relating to diversity and employee relations are also associated with higher risk. The positive influence of both CSR strengths and concerns on a firm’s risk is confirmed using aggregate CSR indicators. Research limitations/implications – The results confirm that CSR strengths and concerns represent distinct constructs that should not be aggregated into a single measure. The effect of poor CSR on firm risk is more significant than what would appear to be the case using an aggregate index. Practical implications – Although lack of CSR engagement may not affect (and may even benefit) a firm’s current performance, it may seriously damage its performance in the future. Firms should be aware of this risk. Originality/value – The positive relationship found between CSR and firm risk underscores the inherent conflict between the interests of employees and those of shareholders. By committing to a more favorable treatment of their employees, firms incur a fixed cost that inevitably transfers more risk to their shareholders.

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