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Rethinking capital structure decision and corporate social responsibility in response to COVID‐19

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  • He Huang
  • Ye Ye

Abstract

COVID‐19 has severely constricted global economic activities. This paper examines the joint effect of capital structure and corporate social responsibility (CSR) activities on firm risk during the COVID‐19 pandemic. We find that firms having excessive debt beyond the optimal level experienced high firm risk during the pandemic and the effect is more prevalent among firms with poor CSR performance. In contrast, firms with a debt level below the optimum are self‐protected regardless of their CSR practices. Our study provides businesses with insights on post‐pandemic directions of capital structure and CSR policies to build up sustainability and resilience in a volatile market.

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  • He Huang & Ye Ye, 2021. "Rethinking capital structure decision and corporate social responsibility in response to COVID‐19," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4757-4788, September.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:3:p:4757-4788
    DOI: 10.1111/acfi.12740
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    3. Jaroslav Mazanec, 2023. "Capital Structure and Corporate Performance: An Empirical Analysis from Central Europe," Mathematics, MDPI, vol. 11(9), pages 1-19, April.
    4. Barbara Grabinska & Dorota Kedzior & Marcin Kedzior & Konrad Grabinski, 2021. "The Impact of CSR on the Capital Structure of High-Tech Companies in Poland," Sustainability, MDPI, vol. 13(10), pages 1-20, May.
    5. Galya Taseva, 2023. "Dynamics of the debt burden of non-financial enterprises in Bulgaria during the period 2016-2020," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 380-407.
    6. David Benjamin Billedeau & Jeffrey Wilson & Naima Samuel, 2022. "From Responsibility to Requirement: COVID, Cars, and the Future of Corporate Social Responsibility in Canada," Sustainability, MDPI, vol. 14(11), pages 1-16, May.
    7. Ehsan Poursoleyman & Gholamreza Mansourfar & Mohammad Kabir Hassan & Saeid Homayoun, 2024. "Did Corporate Social Responsibility Vaccinate Corporations Against COVID-19?," Journal of Business Ethics, Springer, vol. 189(3), pages 525-551, January.
    8. Hupka, Yuri, 2022. "Leverage and the global supply chain," Finance Research Letters, Elsevier, vol. 50(C).
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