Corporate Social Responsibility and Firm Reputation Risk: Bettering Firm Reputational Risk Through Socially Responsible Activities

Abstract

This study aims to extend the literature on CSR as insurance like in relation to firm performance. Socially responsible activities may provide insurance against reputational crises for firms. Specifically, a positive relationship is found between CSR and reputational risk demonstrating an additional reason why pursuing socially responsible activities makes fundamental sense for managers. This study also fills a gap in the literature by examining CSR in a multilevel model and examining an alternative data source to measure CSR beyond traditional KLD data.

Keywords: corporate social responsibility, reputational risk, ESG, stakeholder theory, multilevel models

JEL Classification: M14, Y40