The impact of corporate social responsibility on firm risk during the COVID-19 pandemic

In this thesis, we examine the relationship between corporate social responsibility (CSR) and firm risk in Dutch listed firms during the 2018-2021 period. We develop and asses two hypothesis which are based on both empirical evidence and the agency-, stakeholder-, and legitimacy theory. To test whether CSR affected firm risk, and if this relationship changed due to the COVID-19 pandemic, we conduct ordinary least squares regressions with data gathered from the Thomson Reuters Eikon database and the Yahoo Finance database. In line with the literature, we find a significant negative relationship between CSR engagement and total firm risk, a Keywords: Corporate social responsibility, CSR, firm risk, total firm risk, systematic firm risk, idiosyncratic firm risk, agency theory, stakeholder theory, legitimacy theory, COVID-19nd a significant negative relationship between CSR engagement and idiosyncratic firm risk after controlling for various firm characteristics. No evidence was found for a change in the relationship between CSR and firm risk due to the COVID-19 pandemic. Concluding, this study suggests that Dutch listed firms can contribute to a better tomorrow while also reducing firm risk.