Nexus between oil price uncertainty and corporate social responsibility: evidence from US firms

Purpose - This paper examines the effect of oil price uncertainty on corporate social responsibility (CSR) for 507 US firms over the period 1985–2019. Design/methodology/approach - To investigate the nexus between oil price uncertainty and CSR, we have proceeded with a fixed-effects panel regression model over the period 1985–2019. Findings - Using a dataset of 507 US firms, different specifications of CSR and two alternatives measures of oil price uncertainty, we show that oil price uncertainty negatively influences the CSR in the global US panel and firm's characterized panel. This negative effect is dependent on firms' size, firm's age and value of book share of firms. Research limitations/implications - US firms are exposed to more risk when carrying high levels of debt, resulting in reduced spending to improve social and environmental conditions. While the negative effect of oil price uncertainty on CSR is exacerbated in economic crisis periods. Practical implications - US firms are influenced by energy price volatility especially by oil price fluctuations which are the main factor of American economic growth. The rise of oil price uncertainty reduces sustainable corporate development and investment in the green economy. Social implications - Rethinking renewable energies as an alternative solution in order to guarantee the performance and sustainability of social, environmental and cultural activities. Originality/value - Young and small firms, lower-share outstanding firms and high book value per share firms are the most negatively affected by oil price uncertainty and therefore their social responsibilities are reduced. However, by introducing interaction variables in the main model, we find that the most indebted firms on one hand and big firms and high-number shares outstanding firms, on the other hand, are the most influenced by oil price uncertainty which consequently limits their social and environmental responsibility.