Market valuation of crisis-responsive corporate social responsibility

Abstract

Purpose: This study examines the impact of corporate social responsibility (CSR) initiatives during a major public crisis on stock performance. We explore whether and why crisis-period donations could serve as credible market signals that affect market value, and how ownership type and industry characteristics moderate these effects.
Design/methodology/approach: Utilising a sample of 260 listed firms that donated during the coronavirus disease 2019 containment, we conduct a market model to estimate abnormal returns (ARs). We employ an event-study method to investigate the relationship between crisis-period CSR and market value and test contingent effects by ownership type and industry characteristic.
Findings/results: Crisis-responsive donations generated significantly positive ARs, suggesting that capital markets reward crisis-responsive CSR. However, long-term analyses show limited sustained effects, indicating that donations primarily function as short-term crisis signals. Moreover, value gains are stronger for non-state-owned enterprises (NSOEs) and for non-direct-contact industries.
Practical implications: Given the short-lived nature of CSR signals, firms must complement donations with long-term capability building. Firms should treat CSR as a strategic trust-building tool in crises, with NSOEs leveraging autonomy, state-owned enterprises (SOEs) enhancing transparency and firms in non-direct-contact industries mitigating hygiene concerns.
Originality/value: This study extends crisis management and signalling theory by (1) identifying CSR as a survival premium during crises, signalling resilience and resource sufficiency; (2) demonstrating that institutional embeddedness shapes CSR credibility, with SOE donations often seen as policy-driven while NSOE donations are viewed as discretionary and credible and (3) uncovering a crisis-induced consumer proximity liability, where industry context conditions CSR effectiveness.