18th annual doctoral student conference

2

Presented by: Mohammed Benlemlih

Supervisor: Pr. Isabelle Girerd-Potin

Does Corporate Social Responsibility (CSR) Affect Firm Risk?

8th Annual Doctoral Student Conference

3

Presentation OverviewDefinition & context

HypothesesPrevious literature

Research Question

8th annual doctoral student conference

Data & Methodology

Study Contribution

4

‘‘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)

8th annual doctoral student conference

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

RI : Responsible Investment AUM : Assets Under Management

6

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

What is the impact of CSR on firm performance?

8th annual doctoral student conference

No consensus on this relationship

Positive Negative

7

What will we do?

8th annual doctoral student conference

8

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

Does corporate social responsibility affect firm risk?

8th annual doctoral student conference

9

Systematic & downside

risk

American market

8th annual doctoral student conference

A negative and significant relationship between CSR and financial risk

10

8th annual doctoral student conference

Stablestakeholder relations

Customer loyalty

Employee support

Low risk of lawsuits

Low risk of financial

penalities

H1: Social rating is negatively related to financial risk

11

8th annual doctoral student conference

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

12

8th annual doctoral student conference

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

13

And how ?!

8th annual doctoral student conference

14

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:

8th annual doctoral student conference

15

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

European countries

CSR measures: Vigeo ratings

Risk measures: Systematic & idiosyncratic risk Downside risk

Data

8th annual doctoral student conference

168th annual doctoral student conference

Uncover new pieces of the CSP-FP puzzle

178th annual doctoral student conference

18

Any questions?

Thank you for your attention!

8th annual doctoral student conference