Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis

Lins, K V, Servaes, H and Tamayo, A (2017) Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis. The Journal of Finance, 72 (4). pp. 1785-1824. ISSN 0022-1082

Abstract

During the 2008-2009 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High-CSR firms also experienced higher profitability, growth, and sales per employee relative to low-CSR firms, and they raised more debt. This evidence suggests that the trust between the firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock.

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Item Type: Article
Subject Areas: Finance
Additional Information: This is the peer reviewed version of the following article: Lins KV, Servaes H & Tamayo A (2017) Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis, Journal of Finance, which has been published in final form at https://doi.org/10.1111/jofi.12505. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving. © 2017 The American Finance Association
Subjects: C > Crises
C > Corporate responsibility
R > Rate of return
Date Deposited: 01 Nov 2016 19:05
Last Modified: 25 Mar 2019 14:17
URI: http://lbsresearch.london.edu/id/eprint/579
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