CSR and Firm Survival: Evidence from the Climate and Pandemic Crises

89 Pages Posted: 23 Sep 2021 Last revised: 5 May 2022

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Dimitrios Gounopoulos

University of Bath

Panagiotis Koutroumpis

Queen Mary University London

Yu Zhang

University College Dublin

Date Written: May 3, 2022

Abstract

We analyse the relationship between the extent of a firm’s corporate social responsibility (CSR) and its long-term survival probability. Based on a “nexus of contracts” view of the firm, we conjecture that a better CSR rating is associated with a lower probability of corporate failure and a longer survival period. Consistent with this, we document that four CSR dimensions (environment, community, employee relations, and product) out of six are positively related to firms’ survival probability. We find that a firm’s engagement in CSR activities is particularly crucial for firm survival during pandemics and in states with greater uncertainty induced by climate change and greater demand for regulation related to climate change. The positive association between CSR ratings and firm survival is stronger for firms operating in more competitive industries and those with weaker governance. Finally, better financial performance, more relaxed financial constraints, and enhanced labor productivity are three of the channels through which firms engaging in more CSR activity achieve longer survival times.

Keywords: Corporate Social Responsibility, Climate Change, Pandemic Uncertainty, Firm Survival, Corporate Governance

JEL Classification: G30, G41, M14

Suggested Citation

Chemmanur, Thomas J. and Gounopoulos, Dimitrios and Koutroumpis, Panagiotis and Zhang, Yu, CSR and Firm Survival: Evidence from the Climate and Pandemic Crises (May 3, 2022). Available at SSRN: https://ssrn.com/abstract=3928806 or http://dx.doi.org/10.2139/ssrn.3928806

Thomas J. Chemmanur

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Dimitrios Gounopoulos

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

Panagiotis Koutroumpis (Contact Author)

Queen Mary University London ( email )

Office GC 3.32
Graduate Centre, Mile End Campus
London, E14NS
United Kingdom
02078825872 (Phone)

HOME PAGE: http://www.pkoutroumpis.com

Yu Zhang

University College Dublin ( email )

Dublin

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