Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy

Daoju Peng; Gonul Colak; Jianfu Shen

doi:10.1016/j.jcorpfin.2023.102376

Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy

Daoju Peng
, Gonul Colak^*
, Jianfu Shen

^*Corresponding author for this work

Finance, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

67 Citations (Scopus)

Abstract

We examine the effect of policy uncertainty on firms' strategy of corporate social responsibility (CSR). During uncertain times, firms strategically increase their commitment to CSR causes. Policy uncertainty is positively associated with CSR performance regardless of the estimation method. CSR strategy can substitute for lobbying when firms attempt to manage policy uncertainty. Improved CSR performance can reduce firms' exposure to policy uncertainty which indicates that CSR commitment can deliver insurance-like benefits. The findings highlight the value of CSR commitments during uncertain times.

Original language	English
Article number	102376
Peer-reviewed scientific journal	Journal of Corporate Finance
Volume	79
ISSN	0929-1199
DOIs	https://doi.org/10.1016/j.jcorpfin.2023.102376
Publication status	Published - 03.02.2023
MoE publication type	A1 Journal article - refereed

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 12 Responsible Consumption and Production

Keywords

512 Business and Management
corporate social responsibility (CSR)
policy uncertainty
hedging strategy
gubernatorial elections

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abstract = "We examine the effect of policy uncertainty on firms' strategy of corporate social responsibility (CSR). During uncertain times, firms strategically increase their commitment to CSR causes. Policy uncertainty is positively associated with CSR performance regardless of the estimation method. CSR strategy can substitute for lobbying when firms attempt to manage policy uncertainty. Improved CSR performance can reduce firms' exposure to policy uncertainty which indicates that CSR commitment can deliver insurance-like benefits. The findings highlight the value of CSR commitments during uncertain times.",

keywords = "512 Business and Management, corporate social responsibility (CSR), policy uncertainty, hedging strategy, gubernatorial elections",

author = "Daoju Peng and Gonul Colak and Jianfu Shen",

note = "Funding Information: Daoju Peng acknowledges the financial support from Natural Science Foundation of China (number: 71603172 ). Jianfu Shen acknowledges the financial support from a start-up research grant (number: P0030199 ) and a RGC direct allocation grant (number: P0038209 ) from The Hong Kong Polytechnic University . Gonul Colak acknowledges the financial support from the Czech Science Foundation (grant number: 22-19617S ), Czech Republic. We thank Zhengyi Zhang for help with data. ",

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Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy

Abstract

UN SDGs

Keywords

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