Terrorist Attacks, Corporate Social Responsibility, and Firm Value
Posted: 7 Aug 2018 Last revised: 18 Jan 2021
Date Written: July 18, 2018
Using a sample of 53 major terrorist attacks occurring in the U.S. between 1994 and 2015, this study examines the causal effect of terrorist attacks on firms’ corporate social responsibility (CSR) activities. Our findings indicate that public firms located in close proximity to terrorist attacks (i.e., the impact firms) substantially increase their investment in CSR following terrorist events, and that the increase in CSR investment is positively associated with firm value. We further observe a strengthened association between the increased CSR and firm value when the CSR efforts of the impact firms are related to greater media attention. Overall, our findings support the conjecture that although firms located in the areas most impacted by terrorist attacks are likely to experience a greater demand for CSR activities, the perceived value of the impact firms’ CSR investments increase because their CSR efforts are likely to gain greater community visibility.
Keywords: Terrorist Attacks, CSR, Firm Value, Media Attention, Visibility
JEL Classification: G14, K42, M14
Suggested Citation: Suggested Citation