Does moral capital be an asset when there is a negative CSR event? Reexamining CSR buffering effect

Abstract

This study investigates the valuation effects and the performance of the corporate social responsibility (CSR) activities adopted by the 72 CSR-awarded and the 87 non-awarded listed firms in Taiwan, using 1,368 positive and negative CSR events during the period of the 2008-2011 financial crisis. This study categorizes CSR activities into four groups'Xsociety, the environment, employee, and consumers' Xand provides an overview and a comparison of CSR activities in an emerging economy in Asia. This study focuses on the reputation effect for negative CSR events and compares the performance of the CSR-awarded and non-awarded firms for negative CSR activities. The results show that, in Taiwan, positive CSR activities are accompanied by a significant amount of positive stock price reactions and better long-term performance, which is consistent with the evidence found in the literature. However, compared with non-awarded firms, when CSR-awarded firms experience negative CSR events, their investors will impose stricter punishments. Consequently, the short- and long-term performances of CSR-awarded firms are inferior to those of non-awarded firms.