Social performance and firm risk: impact of the financial crisis

Kais Bouslah; Lawrence Kryzanowski; Bouchra M'Zali

doi:10.1007/s10551-016-3017-x

Social performance and firm risk: impact of the financial crisis

Kais Bouslah^*, Lawrence Kryzanowski, Bouchra M'Zali

^*Corresponding author for this work

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Abstract

This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm’s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.

Original language	English
Pages (from-to)	643-669
Number of pages	27
Journal	Journal of Business Ethics
Volume	149
Issue number	3
Early online date	11 Feb 2016
DOIs	https://doi.org/10.1007/s10551-016-3017-x
Publication status	Published - May 2018

Keywords

Financial crisis
Volatility
Idiosyncratic risk
Social performance
Strengths
Concerns

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10.1007/s10551-016-3017-x

Bouslah_JBE2016_SocialPerformance_cc
© The Author(s) 2016 This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Final published version, 601 KBLicence: CC BY

Kais Ben Hmida Bouslah
- kbhbst-andrews.acuk
- Finance (Business School) - Honorary Lecturer
Person: Honorary

Cite this

@article{1563690d78254d758b6103e04d908511,

title = "Social performance and firm risk: impact of the financial crisis",

abstract = "This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm{\textquoteright}s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm{\textquoteright}s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment. ",

keywords = "Financial crisis, Volatility, Idiosyncratic risk, Social performance, Strengths, Concerns",

author = "Kais Bouslah and Lawrence Kryzanowski and Bouchra M'Zali",

note = "Bouslah and M{\textquoteright}Zali gratefully acknowledge support for this research from the Social Sciences and Humanities Research Council of Canada (SSHRC). Kryzanowski gratefully acknowledges support from the Senior Concordia University Research Chair in Finance, IFM2 and SSHRC. We are also grateful to Robert Sheitoyan Foundation for its support. ",

year = "2018",

month = may,

doi = "10.1007/s10551-016-3017-x",

language = "English",

volume = "149",

pages = "643--669",

journal = "Journal of Business Ethics",

issn = "0167-4544",

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T2 - impact of the financial crisis

AU - Bouslah, Kais

AU - Kryzanowski, Lawrence

AU - M'Zali, Bouchra

N1 - Bouslah and M’Zali gratefully acknowledge support for this research from the Social Sciences and Humanities Research Council of Canada (SSHRC). Kryzanowski gratefully acknowledges support from the Senior Concordia University Research Chair in Finance, IFM2 and SSHRC. We are also grateful to Robert Sheitoyan Foundation for its support.

PY - 2018/5

Y1 - 2018/5

N2 - This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm’s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.

AB - This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm’s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.

KW - Financial crisis

KW - Volatility

KW - Idiosyncratic risk

KW - Social performance

KW - Strengths

KW - Concerns

U2 - 10.1007/s10551-016-3017-x

DO - 10.1007/s10551-016-3017-x

M3 - Article

SN - 0167-4544

VL - 149

SP - 643

EP - 669

JO - Journal of Business Ethics

JF - Journal of Business Ethics

IS - 3

ER -

Social performance and firm risk: impact of the financial crisis

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Kais Ben Hmida Bouslah

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