The effects of heterogeneous CSR on corporate stock performance: evidence from COVID-19 pandemic in China

Abstract Corporate social responsibility (CSR) could be an effective risk-alleviating tool for companies. However, an important issue is whether CSR plays a risk-alleviating role in large negative shocks such as the COVID-19 pandemic. This study investigated the impact of corporate social responsibility on stock performance in China during the COVID-19 pandemic, focusing on the differing effects of strategic and responsive CSR. By analysing daily data on newly confirmed COVID-19 cases and the stock performance of A-share listed companies during the lockdown period in 2020, we find that CSR can significantly mitigate the negative effects of the pandemic on stock returns and recovery. Specifically, responsive CSR has a significant short-term moderating effect, whereas strategic CSR has a significant long-term moderating effect. The moderating effects of CSR are more pronounced among non-state-owned firms, firms with lower financial leverage, and large companies. These findings suggest that companies can reduce short- and long-term risks by strategically using responsive and strategic CSR in response to negative shocks in global economies.