Information asymmetry on the link between corporate social responsibility and stock price crash risk

Abstract

Theoretically, corporate social responsibility (CSR) can have both positive and negative effects on stock price crash risk, and the empirical evidence is mixed. CSR can be a useful signal of better informational quality and acts as an effective corporate governance mechanism, both of which serve important roles in emerging markets. Using a sample of 225 listed firms in Vietnam over the period 2014–2019, we examine the impact of corporate social responsibility disclosure (CSRD) on stock price crash risk, considering the moderating effect of information asymmetry. The research shows that CSRD lowers the risk of a stock price crash. Importantly, this is the first study to investigate the moderating role of information asymmetry in the relationship between CSR disclosure and stock price crash risk. This is in line with the view that CSRD decreases information asymmetry, thus lowering the likelihood of stock price crash risk. Based on the results, we provide important implications for corporate governance and investment in the context of developing countries.