The effect of positive CSR engagement on firm’s financial distress risk in Europe

  • Anna Maria Castenholz (Student)

Student thesis: Master's Thesis


This study examines the influence of Corporate Social Responsibility on the financial distress risk of a company. The Environmental, Social and Governance (ESG) factors are employed as a proxy for CSR, while three different measures are applied to assess financial distress levels, namely Altman‘s Z-Score, Ohlson’s O-Score and Shumway’s Hazard Model. After analyzing a European data set of 1097 publicly listed firms covering the period from 2002-2018, the results suggest that positive CSR engagement reduces the likelihood of falling into costly financial distress, whilst the findings are even more profess for non-crisis periods as well as environmentally sensitive industries. The results are robust to differences in reporting dates, prior levels of financial distress and reverse causality. Collectively, the findings are in line with the stakeholder view of CSR, suggesting that improving firm-stakeholder relationships decreases a firm’s financial distress risk.
Date of Award28 Jan 2021
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorRicardo Ferreira Reis (Supervisor)


  • Corporate Social Responsibility
  • ESG
  • Financial distress
  • Altman Z-Score
  • Ohlson O-Score
  • Shumway Hazard model


  • Mestrado em Gestão e Administração de Empresas

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