Stakeholders and the Stock Price Crash Risk: What Matters in Corporate Social Performance?

48 Pages Posted: 6 Jan 2019 Last revised: 24 Feb 2022

See all articles by Ariadna Dumitrescu

Ariadna Dumitrescu

ESADE Business School

Mohammed Zakriya

IÉSEG School of Management; CNRS; Lille Economie Management (LEM) UMR 9221; University of Lille

Date Written: December 21, 2018


This study provides evidence for the differential impacts of corporate social responsibility (CSR) initiatives targeting different stakeholder groups on stock price crash risk. In particular, it highlights CSR’s role in mitigating risk and creating shareholder value. Our results reveal that managerial bad news hoarding and the resultant stock crashes are largely determined by the social CSR dimension, and this effect is predominantly seen in undervalued firms. Moreover, social CSR subcategories aimed at specific stakeholder groups (such as the community, employees, or customers) tend to mitigate future crashes. In contrast, firms’ environmental initiatives and governance characteristics seem to have trivial effects on stock crashes. Using a quasi-natural experiment, we find that the mitigating effect of social CSR dimension on crash risk is likely to be causal.

Keywords: CSR, ESG, Crash Risk, Social Performance, Environmental Performance

JEL Classification: G14, G30, M14, Q50

Suggested Citation

Dumitrescu, Ariadna and Zakriya, Mohammed, Stakeholders and the Stock Price Crash Risk: What Matters in Corporate Social Performance? (December 21, 2018). Journal of Corporate Finance, Vol. 67, No. 101871, 2021, Available at SSRN: or

Ariadna Dumitrescu

ESADE Business School ( email )

Av. Pedralbes 60-62
Barcelona, 08034

Mohammed Zakriya (Contact Author)

IÉSEG School of Management ( email )

3 rue de la Digue
Lille, 59000

CNRS ( email )


Lille Economie Management (LEM) UMR 9221 ( email )


University of Lille ( email )

Cité Scientifique
Villeneuve-d'Ascq, 59650

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