Social capital and firm performance

: the resiliency of Corporate Social Responsibility to COVID-19

Abstract

The COVID-19 pandemic caught the entire globe unprepared. The quick viral spread, the stringent lockdowns, and the dramatic response of capital markets have perturbed the economic and social order on an unprecedented scale and lightning speed. This Dissertation investigates the impact of social capital, measured by corporate social responsibility (CSR), on the financial performance of U.S. firms during the pandemic-induced market turmoil (March-July 2020). The results show that high-CSR firms experienced lower risk exposure and superior operating profit margins relative to low-CSR firms. However, there is no evidence that CSR provided such resilient power for the performance of mean returns. The collected wisdom points to a clear stock return underperformance associated with very low CSR scores, but refutes the idea that excelling in CSR offers the highest returns. Another prominent result is the fact that investing in CSR is especially fruitful in periods of crisis; the effect is weaker or even null outside the crisis.

Date of Award	5 Feb 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Diana Bonfim (Supervisor)