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Corporate social responsibility and profit volatility: theory and empirical evidence

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Abstract

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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    References listed on IDEAS

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    Cited by:

    1. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo Group Munich.
    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," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168257, Verein für Socialpolitik / German Economic Association.
    4. Luciano Fanti & Domenico Buccella, 2017. "Profitability of corporate social responsibility in network industries," Discussion Papers 2017/216, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    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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