Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis

During the 2008–2009 financial crisis, firms with high social capital, as measured by 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,...

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Bibliographic Details
Published in:	The Journal of finance (New York) 2017-08, Vol.72 (4), p.1785-1823
Main Authors:	LINS, KARL V., SERVAES, HENRI, TAMAYO, ANE
Format:	Article
Language:	eng
Subjects:	Companies Corporate responsibility Economic crisis Markets Organizational performance Profitability Sales Social capital Social responsibility Stock prices
Online Access:	Get full text
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Summary:	During the 2008–2009 financial crisis, firms with high social capital, as measured by 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 a 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.
ISSN:	0022-1082 1540-6261