Issue |
E3S Web Conf.
Volume 409, 2023
International Conference on Management Science and Engineering Management (ICMSEM 2023)
|
|
---|---|---|
Article Number | 01012 | |
Number of page(s) | 11 | |
Section | Sustainable Development | |
DOI | https://doi.org/10.1051/e3sconf/202340901012 | |
Published online | 01 August 2023 |
The Effect of Listed Companies’ Social Responsibility on the Market Reaction to Violations
1 School of Business, Sichuan University, Chengdu, 610064, Sichuan, People’s Republic of China
2 Wah Campus, Comsats University Islamabad, Islamic Republic of Pakistan
* e-mail: liujinsong2022@163.com
This study investigates whether the listed company’s social responsibility will impact investors and regulators after corporate frauds. Does the corporate social responsibility (CSR) performance bring about the “compensation” effect or the “reputation collapse” effect? Using the cumulative abnormal return to characterize the market reaction, our results based on the Chinese listed firms that have committed violations throughout 2010-2020 show that the announcement of violation enforcement will produce significantly negative market reaction, and the more serious the type of violation enforcement, the greater the negative market reaction. Further, we find that the corporate social responsibility (CSR) performance will not directly affect the market reaction of the announcement of punishment for violations, but it will increase the severity of the company’s punishment for violations, thus indirectly bringing more negative market reaction. Overall, our findings suggest that the listed company’s social responsibility (CSR) performance before violation cannot play a “compensation” effect to offset the negative impact caused by its violation, it may bring more serious administrative punishment to the company due to the “reputation avalanche” effect inversely, thus leading to more negative economic consequences, and is not conducive to the sustainable development of the company.
Key words: Corporate social responsibility / Corporate violation / Sustainable development
© The Authors, published by EDP Sciences, 2023
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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