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Where does corporate social capital matter the most? Evidence From the COVID-19 crisis

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  • Fiordelisi, Franco
  • Galloppo, Giuseppe
  • Lattanzio, Gabriele

Abstract

Firms with high social capital systematically outperform their peers during periods of economic distress. Yet, it is not clear under which institutional conditions corporate social capital is the most valuable to shareholders. By studying the performance of 1,789 firms in 27 countries during the initial phases of the COVID-19 pandemic, we document that the resilience effect of social capital is heterogeneous across countries. We identify the flexibility of a country's labor market as a critical determinant of corporate's returns on social capital-related investments. These findings are consistent with social capital hedging firms against systematic shocks by mitigating employee-related litigation risk.

Suggested Citation

  • Fiordelisi, Franco & Galloppo, Giuseppe & Lattanzio, Gabriele, 2022. "Where does corporate social capital matter the most? Evidence From the COVID-19 crisis," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005018
    DOI: 10.1016/j.frl.2021.102538
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    Cited by:

    1. Huanan Sun & Lianmei Zhu & Anqi Wang & Shali Wang & Haijing Ma, 2022. "Analysis of Regional Social Capital, Enterprise Green Innovation and Green Total Factor Productivity—Based on Chinese A-Share Listed Companies from 2011 to 2019," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    2. Hooi Hooi Lean & Fabio Pizzutilo & Kimberly Gleason, 2023. "Portfolio performance implications of investment in renewable energy equities: Green versus gray," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2990-3005, November.

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    More about this item

    Keywords

    Corporate social capital; Labor market rigidity; Reputational capital; COVID-19; Stakeholders;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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