Terrorist Attacks, Corporate Social Responsibility, and Firm Value

Posted: 7 Aug 2018 Last revised: 18 Jan 2021

See all articles by Trung K. Do

Trung K. Do

National Central University - Department of Finance

Henry Hongren Huang

National Central University

Albert Tsang

Hong Kong Polytechnic University

Date Written: July 18, 2018

Abstract

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

Do, Trung K. and Huang, Henry Hongren and Tsang, Albert, Terrorist Attacks, Corporate Social Responsibility, and Firm Value (July 18, 2018). Available at SSRN: https://ssrn.com/abstract=3215766 or http://dx.doi.org/10.2139/ssrn.3215766

Trung K. Do (Contact Author)

National Central University - Department of Finance ( email )

No. 300, Zhongda Rd., Zhongli District
Taoyuan, 32001
Taiwan

Henry Hongren Huang

National Central University ( email )

No. 300, Zhongda Road
Chung-Li Taiwan, 32054
Taiwan

Albert Tsang

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

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