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

Lins, K V and 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

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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.

Item Type: Article
Additional Information: © 2016 The American Finance Association
Subjects: C > Crises
C > Corporate responsibility
R > Rate of return
Subject Areas: Finance
DOI: 10.1111/jofi.12505
Date Deposited: 01 Nov 2016 19:05
Last Modified: 01 Sep 2017 13:44
URI: http://lbsresearch.london.edu/id/eprint/579

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