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Corporate social responsibility and litigation risk: Evidence from securities class action lawsuits

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  • Atreya Chakraborty
  • Lucia S. Gao
  • Prianka Musa

Abstract

This study examines whether corporate social responsibility (CSR) is associated with the likelihood and outcomes of securities class action lawsuits. We find a lower likelihood of securities litigation for firms with higher CSR. This effect is larger for companies with lower levels of financial distress, companies with larger proportions of institutional investors, and for internal CSR. Additionally, CSR has a mitigating effect on negative market assessments around the filing dates of securities litigation. The results suggest that higher CSR firms are less likely to engage in financial misconduct, and investors are less likely to penalise them for such occurrences.

Suggested Citation

  • Atreya Chakraborty & Lucia S. Gao & Prianka Musa, 2023. "Corporate social responsibility and litigation risk: Evidence from securities class action lawsuits," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 1785-1819, June.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:2:p:1785-1819
    DOI: 10.1111/acfi.12929
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