- Title
- The non-linear effect of CSR on firms' systematic risk: International evidence
- Creator
- Farah, Tazrina; Li, Jialong; Li, Zhicheng; Shamsuddin, Abul
- Relation
- Journal of International Financial Markets, Institutions & Money Vol. 71, Issue March 2021, no. 101288
- Publisher Link
- http://dx.doi.org/10.1016/j.intfin.2021.101288
- Publisher
- Elsevier
- Resource Type
- journal article
- Date
- 2021
- Description
- This study examines the nonlinear effects of corporate social responsibility (CSR) on firms’ systematic risk and identifies the degree of operating leverage as a channel through which CSR exerts its influence on firm risk. Using a large international sample of firms from 43 countries for the period 2005–2017, we find that the relationship between CSR and firms’ systematic risk is nonlinear, exhibiting an inverted U-shaped pattern. More specifically, our results show that initially risk rises with an increase in CSR but after reaching a threshold level of CSR, firms experience risk reduction as CSR increases. The CSR–risk relationship is moderated by a few country-specific factors, namely national CSR sustainability and legal environment. Our findings are robust to controlling for potential endogeneity of CSR.
- Subject
- csr; systematic risk; degree of operating leverage; inverted U-shape; SDG 12; Sustainable Development Goals
- Identifier
- http://hdl.handle.net/1959.13/1448694
- Identifier
- uon:43465
- Identifier
- ISSN:1042-4431
- Language
- eng
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Goal 12: Responsible Consumption and Production
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