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

Journal

Journal of Finance

Subject

Finance

Publishing details

Journal of Finance 2017 Vol 72:4 p 1785-1824

Authors / Editors

Lins K V;Servaes H;Tamayo A

Biographies

Henri Servaes

Publication Year

2017

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.

Keywords

Trust; Social capital; Corporate social responsibility; Financial crisis; Stock returns

Available on ECCH

No


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