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Does corporate social responsibility affect firm risk? Evidence from the Netherlands

Boerrigter, J.J. (2021) Does corporate social responsibility affect firm risk? Evidence from the Netherlands.

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Abstract:During the last century, Corporate Social Responsibility (CSR) received an increased attentiveness in the literature and among different kind of stakeholders. Academics try to understand the impact of CSR on organizations as well as on society. Prior studies have examined different relationships between CSR and financial performance. However, the relationship between CSR and firm risk is less well understood. Therefore, this study examines whether CSR affects the risk of Dutch listed firms or not. Based on the agency, stakeholder, legitimacy, and institutional theory as well as on empirical evidence, several hypotheses are developed. The hypotheses are tested by executing multiple OLS regressions. The data for this research is gathered from the Thomson Reuters Eikon database and from Yahoo finance. The sample consists of 53 firms with 221 firm-year observations covering the years 2015-2020. The results showed that the empirical models are mainly significant. This study found evidence that the level of CSR disclosures reduces the level of total firm risk and idiosyncratic risk. However, there is no evidence found that the level of CSR disclosures affects the level of systematic risk. Finally, this study proofs that the individual environmental disclosures also negatively influence the level of firm risk.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/86355
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