LBS professor awarded ECGI prize for financial crisis paper

Henri Servaes recognised by European Corporate Governance Institute 

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A London Business School professor of finance has been awarded a European Corporate Governance Institute (ECGI) prize for research into social capital, trust and firm performance during the financial crisis.

Henri Servaes, Richard Brealey Professor of Corporate Governance and Professor of Finance, London Business School, was awarded the Working Paper - Finance Series prize, equivalent to £3,892, for ‘Social Capital, Trust, and Firm Performance during the Financial Crisis’, a research paper he co-authored last year.

Professor Servaes says: “I am very pleased that our research is being recognised in this way. Research on the importance of social capital and trust is gaining momentum in finance and economics, and receiving this prize provides further encouragement to continue our research in this area.”

The paper, co-authored with Karl Lins, Professor of Finance, University of Utah, and Ane Tamayo, Professor of Accounting, London School of Economics, examines the link between a firm’s social capital, measured by its Corporate Social Responsibility (CSR) activities, and its performance during the financial crisis.

The study found that high-CSR firms experienced higher stock returns, profitability, sales growth, and sales per employee during the 2008-2009 financial crisis. It suggests that the trust between the firm, 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.

Professor Henri Servaes has taught in programmes around the world, and is also a Research Fellow of the Centre for Economic Policy Research and a Research Associate of the European Corporate Governance Institute. He teaches corporate finance and corporate governance on London Business School’s Senior Executive Programme and the Corporate Finance Programme.