Can corporate social responsibility protect firm value during the COVID-19 pandemic?

Shangzhi Charles Qiu; Jianing Jiang; Xinming Liu; Ming-Hsiang Chen; Xina Yuan

doi:10.1016/j.ijhm.2020.102759

Can corporate social responsibility protect firm value during the COVID-19 pandemic?

Int J Hosp Manag. 2021 Feb:93:102759. doi: 10.1016/j.ijhm.2020.102759. Epub 2020 Nov 11.

Authors

Shangzhi Charles Qiu¹, Jianing Jiang¹, Xinming Liu², Ming-Hsiang Chen³, Xina Yuan¹

Affiliations

¹ School of Management, Xiamen University, 422 South Siming Road, Xiamen, Fujian, China.
² School of Management, Xiamen University, Center for Accounting Studies, Xiamen University, 422 South Siming Road, Xiamen, Fujian, China.
³ School of Hospitality Business Management, Washington State University, Pullman, WA, 99164-4742, USA.

Abstract

The novel coronavirus (COVID-19) pandemic has caused a significant decline in the stock market worldwide, and hospitality companies are experiencing serious financial problems. Protecting and preserving firm value is a critical way of helping hospitality companies survive the crisis. The influence of corporate social responsibility (CSR) on firm value has been widely investigated. However, little is known about the stock price movement following CSR activity adoption during an industrial crisis. Using event study and difference-in-difference method, this study reveals that engaging in CSR activities can increase the stock returns and stakeholder attention of hospitality firms during the pandemic. Community-related CSR has a stronger and more immediate effect on stock returns than customer- and employee-related CSR. Results also indicate that hospitality firms that pursue improved stock market performance during a pandemic can invest in CSR to protect communities, customers, and employees for attracting further stakeholder attention.

Keywords: COVID-19; Corporate social responsibility; Stakeholder attention; Stock returns.