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Presented by: Mohammed Benlemlih

Supervisor: Pr. Isabelle Girerd-Potin

Does Corporate Social Responsibility (CSR) Affect Firm Risk?

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Presentation OverviewDefinition & context

HypothesesPrevious literature

Research Question

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Data & Methodology

Study Contribution

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‘‘A socially responsible firm is one whose managerial staff balances a multiplicity of interests. Instead of striving only for larger profits for stockholders, a responsible entreprise also takes into account employees, suppliers, dealers, local communities, and the nation.’’

(Johnson, 1971)

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5(Booz & Company, 2009)8th annual doctoral student conference

RI : Responsible Investment AUM : Assets Under Management

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Previous literature on CSR focused on relationship between social performance and financial performance

What is the impact of CSR on firm performance?

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No consensus on this relationship

Positive Negative

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What will we do?

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A new research stream to study the relationship between CSR and financial risk

Does corporate social responsibility affect firm risk?

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Systematic & downside

risk

American market

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A negative and significant relationship between CSR and financial risk

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Stablestakeholder relations

Customer loyalty

Employee support

Low risk of lawsuits

Low risk of financial

penalities

H1: Social rating is negatively related to financial risk

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Corporate governance

H2: Impact of CSR on risk is better captured when using individual

measures for CSR

Dimensions of CSR are those of Vigeo Rating

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H3:The negative relationship between corporate social responsibility and financial risk is stronger during times of crisis

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And how ?!

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Portfolio approach: Create responsible and

non-responsible portfolios. Compare risk level in each portfolio.

Regression approach: Estimate a model.

Try to explain firm financial risk by CSR ratings and other variables.

Two different approaches:

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Sample period: 01/12/1999 to 01/01/2012

European countries

CSR measures: Vigeo ratings

Risk measures: Systematic & idiosyncratic risk Downside risk

Data

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Uncover new pieces of the CSP-FP puzzle

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Any questions?

Thank you for your attention!

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