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Corporate social responsibility and profit volatility: theory and empirical evidence

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Corporate social responsibility implies extra care for the wellbeing of stakeholders different from shareholders. In our theoretical model we show that, when this principle implies that more CSR oriented companies incorporate stakeholders’ wellbeing constraints, it translates into higher sensitivity of profits to economic shocks. Our empirical analysis finds support for this hypothesis showing that CSR attributes which relate to positive contributions to stakeholders’ wellbeing significantly and positively affects idiosyncratic profit volatility.

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  • Becchetti, Leonardo & Solferino, Nazaria & Tessitore, Maria Elisabetta, 2013. "Corporate social responsibility and profit volatility: theory and empirical evidence," AICCON Working Papers 129-2013, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  • Handle: RePEc:ris:aiccon:2013_129
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    Cited by:

    1. Jine Qian & Qiang Gong & Leonard F.S. Wang, 2021. "Corporate social responsibility, loan commitment, and social welfare in network duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 952-960, June.
    2. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    3. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Why Firms Should Care for All Consumers," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168257, Verein für Socialpolitik / German Economic Association.
    4. Laszlo Goerke, 2022. "Trade unions and corporate social responsibility," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 177-203, March.
    5. Solferino, Nazaria & Solferino, Viviana, 2016. "The Corporate Social Responsibility is just a twist in a Möbius strip," Economics Discussion Papers 2016-12, Kiel Institute for the World Economy (IfW Kiel).
    6. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo.
    7. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
    8. Solferino, Nazaria & Solferino, Viviana, 2016. "The corporate social responsibility is just a twist in a Möbius strip," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-24.
    9. Luciano Fanti & Domenico Buccella, 2021. "Corporate social responsibility in unionised network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(2), pages 235-262, June.
    10. Lopez Arceiz, Francisco & Solferino, Nazaria & Solferino, Viviana & Tortia, Ermanno C., 2016. "Corporate social responsibility is just a twist in a Möbius Strip: An empirical test on Italian cooperatives," MPRA Paper 74776, University Library of Munich, Germany.

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    More about this item

    Keywords

    corporate social responsibility; stock price volatility;

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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