Corporate Social Responsibility and Idiosyncratic Risk The impact of CSR on the idiosyncratic risk of Chinese enterprises

¹ School of Economics and Finance, South China University of Technology, Guangzhou, 510000, China
² Department of Mathematics, University of California San Diego, San Diego, 92092, United States
³ Faculty of Science, McMaster University, Hamilton, L8S 4L8, Canada

^† These authors contributed equally.
^* Corresponding author. Email:
^a 201830710309@mail.scut.edu.cn,
^b j4shen@ucsd.edu,
^c chenr71@mcmaster.ca

Abstract

This paper investigates the impact of corporate social responsibility on the idiosyncratic risk of enterprises. We find that corporate social responsibility is negatively associated with the idiosyncratic risk of enterprises. This association is robust to a series of robustness checks, including the use of alternative indicators, exclusion of the effect of multicollinearity, and the addition of missing variables to address endogeneity concerns. Further analyses show that the impact of corporate social responsibility on idiosyncratic risk is more significant in state-owned enterprises, firms with poor corporate governance or low growth. Our findings support the notion that corporate social responsibility appears to improve corporate performance.