This paper examines the impact of the recent financial crisis on the relation between a firm’s risk and social performance using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger (...) with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment. (shrink)

This paper investigates the corporate social responsibility (CSR) structures of U.S. listed firms. We find evidence of a general tendency towards CSR specialization with almost three-quarters (73.91%) of these firms focusing on a single CSR dimension. The degree of specialization varies across industries and the single CSR dimension focused on also varies for industries with similar degrees of specialization. We find that firms with higher exposures to CSR concerns, international activities, larger size, and higher financial slack tend to diversify across (...) multiple CSR dimensions. More importantly, we find evidence that diversified CSR structures positively affect a firm’s value relative to a control group before and during the 2008 financial crisis. Our findings have important implications for corporate and portfolio managers, investors, and policy makers. (shrink)

Using U.S. Department of Justice data on state-level political corruption, we find that, consistent with the Harmful Corruption Environment Hypothesis (HCEH), firms situated in states with higher levels of corruption incur higher costs of equity (CoEs). These results are robust for additional controls, propensity score matching, use of instrumental variables, exogenous shocks, and alternate measures for main dependent and primary independent research variables. Our study extends the stream of literature that investigates the influence of local ethical or trust factors on (...) CoE and complements works by El Ghoul and colleagues and Gupta and colleagues. (shrink)