Does CSR matter in times of crisis? Evidence from the COVID-19 pandemic

Kee-Hong BAE, Sadok EL GHOUL, Zhaoran Jason GONG, Omrane GUEDHAMI

Research output: Journal PublicationsJournal Article (refereed)peer-review

272 Citations (Scopus)


The debate over how firm stakeholder engagement is tied to preserving shareholder wealth has received growing attention in recent years, especially in the wake of the COVID-19 crisis. Against this backdrop, we examine the relation between corporate social responsibility (CSR) and stock market returns during the COVID-19 pandemic-induced market crash and the post-crash recovery. Using a sample of 1750 U.S. firms and two major sources of CSR ratings, we find no evidence that CSR affected stock returns during the crash period. This result is robust to various sensitivity tests. In additional cross-sectional analysis, we find some supporting evidence, albeit weak, that the relation between CSR and stock returns during the pandemic-related crisis is more positive when CSR is congruent with a firm's institutional environment. We also find that Business Roundtable companies, which committed to protecting stakeholder interests prior to the pandemic, do not outperform during the pandemic crisis. We conclude that pre-crisis CSR is not effective at shielding shareholder wealth from the adverse effects of a crisis, suggesting a potential disconnect between firms' CSR orientation (ratings) and actual actions. Our evidence suggests that investors can distinguish between genuine CSR and firms engaging in cheap talk.
Original languageEnglish
Article number101876
JournalJournal of Corporate Finance
Early online date5 Jan 2021
Publication statusPublished - Apr 2021

Bibliographical note

We thank Douglas Cumming (Editor), two anonymous reviewers, Najah Attig, Narjess Boubakri, Ruiyuan Chen, He Wang, and Ying Zheng for their constructive comments and suggestions. Bae and El Ghoul appreciate generous financial support from Canada's Social Sciences and Humanities Research Council (Grant # 435-2020-1156 ).


  • COVID-19 crisis
  • Corporate social responsibility
  • Stakeholder welfare vs. shareholder value
  • Stock return performance
  • Valuation channels

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