Abstract
This paper investigates whether firm-level (idiosyncratic) political risk (PR) affects the relationship between corporate social responsibility (CSR) and firm value using a sample of 16,518 firm-year observations which correspond to 2055 unique firms belonging to the Russell 3000 Index over the sample period 2010–2020. Our main findings are as follows: First, firm-level PR does not affect firm value. Second, CSR is positively related to firm value, which is mainly driven by the social component of CSR. Finally, PR has no effect on the CSR–firm value relationship, regardless of the PR type. Our evidence suggests that firm-level PR is not priced in the financial market and as such it does not affect the CSR–firm value relationship. This is consistent with portfolio theory which suggests that only systematic risk is priced.
| Original language | English |
|---|---|
| Article number | 11217 |
| Number of pages | 24 |
| Journal | Sustainability |
| Volume | 14 |
| Issue number | 18 |
| DOIs | |
| Publication status | Published - 7 Sept 2022 |
Keywords
- Firm-level political risk
- Corporate and social responsibility
- Firm value
- Systematic political risk
Access to Document
- Marhfor-2022-Does-firm-political-risk-Sustainability-14-11217-CCBY
Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).