52 Pages Posted: 28 Jan 2015 Last revised: 17 Oct 2016
Date Written: October 3, 2016
During the 2008-2009 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High-CSR firms also experienced higher profitability, growth, and sales per employee relative to low-CSR firms, and they raised more debt. This evidence suggests that the trust between the firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock.
Keywords: trust, social capital, corporate social responsibility, financial crisis, stock returns
JEL Classification: D64, M14, G30
Suggested Citation: Suggested Citation
Lins, Karl V. and Servaes, Henri and Tamayo, Ane, Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis (October 3, 2016). Journal of Finance, Forthcoming; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 446/2015. Available at SSRN: https://ssrn.com/abstract=2555863