CSR engagement and financial risk: A virtuous circle? International evidence

By Pierre Chollet, B. Sandwidi. Global Finance Journal, 2018

200 citations recorded by the source corpus.

This paper investigates the complex relationship between the financial risk of firms and their engagement in corporate social responsibility (CSR), measured by Thomson Reuters ASSET4 environmental, social, and governance scores. Financial risk is estimated by the usual proxies: systematic, firm-specific, and total risks. Analyzing an international sample of 23,194 firm-year observations from 2003 to 2012 by using a panel vector autoregressive (VAR) model with generalized method of moments (GMM) estimations, we demonstrate a virtuous circle between corporate social performance (CSP) and risk (specific and total). More specifically, we show that a firm's good social and governance performance reduces its financial risk and thereby reinforces its commitment to good governance and environmental practices.

Subfields: Economics and Econometrics, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/e88ddc36539ef7430ab2050d2bf24ade4181837a

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Citations in the corpus

The causality direction of the corporate social responsibility – Corporate financial performance Nexus: Application of Panel Vector Autoregression approach (2019, background): “Another relevant study is Chollet and Sandwidi (2018). They instigate the virtuous circle between corporate social performance and the firm’s risk. More specifically, they show that a firm's good social and governance performance reduces its financial risk and thereby reinforces its commitment to go”
An Exploratory Study Based on a Questionnaire Concerning Green and Sustainable Finance, Corporate Social Responsibility, and Performance: Evidence from the Romanian Business Environment (2019, background): “In addition, “green” and “sustainable finance”, as seen by the European Commission, is intended to address the following key outcomes: • Firstly, unlocking “more investment from the EU and the rest of the world”, in order to generate, attract, circulate and transfer capital in Europe with the purpos”
Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks (2019, methodology): “…2018; Brooks & Oikonomou, 2018; Samuel, 2017), CSR and cost of capital (Michaels & Grüning, 2017; Reverte, 2012), CSR and cost of debt (Sveva & Federica, 2017; Ye & Zhang, 2011) and CSR and risk in the company level (Benlemlih & Girerd‐Potin, 2017; Chollet & Sandwidi, 2018; Nguyen & Nguyen, 2015).”