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The effect of suppliers' corporate social responsibility concerns on customers' stock price crash risk

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  • Chen, Huimin (Amy)
  • Karim, Khondkar
  • Tao, Anqi

Abstract

We investigate the spillover effect of corporate social responsibility (CSR) concerns along the supply chain. We propose an information incorporation effect for whether suppliers' CSR concerns affect customers' stock price crash risk. Customers' investors can incorporate information about suppliers' CSR into stock price valuations, lowering the probability of abrupt stock price crashes. Our findings support the information incorporation effect. Suppliers' CSR concerns are negatively associated with customers' stock price crash risk. The negative relationship is more pronounced for firms with high media coverage, negative media sentiment, high investor attention, negative investor sentiment, low trade policy uncertainty, and low political uncertainty. Moreover, we rule out the alternative explanation that suppliers' CSR strengths dominate the effect. Our main finding is supported by change analysis and robustness tests, including an alternative measure test.

Suggested Citation

  • Chen, Huimin (Amy) & Karim, Khondkar & Tao, Anqi, 2021. "The effect of suppliers' corporate social responsibility concerns on customers' stock price crash risk," Advances in accounting, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:advacc:v:52:y:2021:i:c:s0882611021000043
    DOI: 10.1016/j.adiac.2021.100516
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    2. 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.
    3. Shi, Jinyan & Liu, Xu & Li, Yanxi & Yu, Conghui & Han, Yushan, 2022. "Does supply chain network centrality affect stock price crash risk? Evidence from Chinese listed manufacturing companies," International Review of Financial Analysis, Elsevier, vol. 80(C).

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