Social Performance and Firm Risk: Impact of the Financial Crisis

2016/02/11 by Kais Bouslah, Lawrence Kryzanowski, Bouchra M’Zali
Business, Management and Accounting · #Auditing, Earnings Management, Governance #Corporate Finance and Governance #Corporate Social Responsibility Reporting

paper · pdf · doi:10.1007/s10551-016-3017-x

openalex publication_date 2016/02/11 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01

Abstract

This paper examines the impact of the recent financial crisis (2008-2009) on the relation between a firm's risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991-2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm's risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.

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