Do corporate social responsibility reduce crash risk of stock price: evidence from China

Abstract

Purpose The 2008 global financial crisis stimulated the research interest in stock price crash risk. However, the determinants of stock price crash risk remain unclear, especially in transitional economies. The purpose of this paper is to investigate the association between corporate social responsibility (CSR) and stock price crash risk, as well as the moderating effects under different contexts. Design/methodology/approach Using firm-level data of listed firms in China from 2010 to 2019, this paper estimates with correlation analysis and multiple regression analysis. Findings This paper’s empirical results show that the constraint of CSR on bad news hoarding behavior can reduce stock price crash risk. Further research shows that internal CSR has a significant effect on crash risks, while external CSR has not. Additionally, CSR has a relatively weak impact on crash risk in state-owned enterprises, enterprises with higher internal control quality and enterprises with better regional financial development. Originality/value This paper contributes to the stock price crash risks literature by examining the CSR-stock price crash risk linkage in a Chinese context, revealing collective explanations under different contexts with important implications for the application of CSR in business practice.

The impact of FinTech development on stock price crash risk and the role of corporate social responsibility: Evidence from Vietnam

“…Managers in firms with higher social responsibility may also be expected to have limited incentive to withhold bad news, thus reducing crash risk. Supporting this argument, Su and Zhou (2022) found that CSR plays an important role in constraining bad news hoarding and reducing future crash risk. Choi and Byun (2018) also provided evidence that CSR commitment leads managers to become more responsible in management, thus reducing earning management and enhancing the quality of financial information.…”

تأثیر جودة المعلومات المحاسبیة على العلاقة بین میول المستثمرین وخطر انهیار أسعار الأسهم: أدلة من الشركات المقیدة بالبورصة المصریة

“…‫عه‬ ‫اسس‬ ‫ععار‬ ‫أس‬ ‫عار‬ ‫انهي‬ ‫عر‬ ‫وخط‬ ‫ين‬ ‫عتثمر‬ ‫المس‬ ‫عول‬ ‫مي‬ ‫عين‬ ‫ب‬ (Alnafea & Chebbi, 2022;Cui & Zhang, 2020;Fan et al, 2021;Fu et al, 2021;Wu et al, 2021;Yin & Tian, 2017 Lee, 2016;Su & Zhou, 2023) ‫عية‬ ‫المؤسس‬ ‫عة‬ ‫الماني‬ ‫عبة‬ ‫نس‬ ‫عاات‬ ‫ي‬ ‫وع‬ ‫ب‬ (An & Zhang, 2013;Callen & Fang, 2013;Tee et al, 2018) ‫عدين‬ ‫الت‬ ‫عتو‬ ‫مس‬ ‫عاات‬ ‫ي‬ ‫وع‬ ‫ب‬ Religiosity (Callen & Fang, 2015a;Li & Cai, (Cornell et al, 2017;Firth et al, 2015;Kim et al, 2021) ‫عاع‬ ‫اافخ‬ ‫عتو‬ ‫مس‬ ‫عن‬ ‫م‬ ‫عد‬ ‫ي‬ ‫ا‬ ‫و‬ ‫عيمةب‬ ‫الس‬ ‫عار‬ ‫اسخب‬ ‫ين‬ ‫عا‬ ‫د‬ ‫عطة‬ ‫أنك‬ ‫عن‬ ‫م‬ ‫ع‬ ‫قا‬ ‫أخر‬ ‫ناحية‬ ‫ومن‬ ‫ب‬ ‫عة‬ ‫المالي‬ ‫ير‬ ‫عار‬ ‫إلالتق‬ ‫ية‬ ‫عدا‬ ‫الك‬ ‫و‬ (DeFond et al, 2015;Hutton et al, 2009;Kim & Zhang, 2014;Zhu, 2016 (Black, 1986;De Long et al, 1990;Shleifer & Vishny, 1997 (Dervishaj, 2021;Kengatharan & Kengatharan, 2014;Prosad et al, 2015) . (Black, 1986;De Long et al, 1990;Shleifer & Vishny, 1997 (Baker & Stein, 2004;Brown & Cliff, 2005;Hong & Stein, 2003 (Shefrin, 2002;Tversky & Kahneman, 1974) .…”

Stock price trend of selected companies applying the principles of circular economy

“…It has become a much more complex and impossible task to identify the impact of this information on stock markets and predict stock returns and volatility. According to Su & Zhou (2022), the global financial crisis in 2008 spurred research interest in stock price crash risk. However, the determinants of stock price crash risk still need to be clarified, especially in transition economies.…”

“…Overall, the analysis suggests that sustainability efforts translate into a sustained increase in stock demand, leading to higher performance. Su & Zhou (2022) studied the relationship between CSR and stock price crash risk in the Chinese context. Based on details of listed firms in China between 2010 and 2019, they provided estimates using correlation analysis and multiple regression analysis as well as empirical proof that restricting CSR to bad news accumulation behaviour can reduce the risk of stock price crashes.…”

“…They also document that internal CSR significantly affects accident risk while external CSR does not. In addition, Su & Zhou (2022) argue that CSR has a reasonably low impact on crash risk in SOEs, businesses with higher internal control quality, or businesses with better regional financial growth. Utz (2018) used regression and correlation analysis to study the relationship between CSR and the distribution of stock returns in an international sample.…”