Moderating Role of National CSR Ratings: Empirical Evidence on the Relationship Between CSR Disclosure and Firm Risk

The growing importance of CSR has fueled extensive research on its link to firm risk, yet little attention has been given to how home-country CSR ratings shape this relationship, particularly for foreign firms listed on U.S. exchanges. This study examines the moderating effect of national CSR ratings in the relationship between firm CSR disclosure and risk. Using 23,579 firm-year observations from 2006 to 2018, we find that investors will evaluate socially responsible firms from countries with low CSR ratings more favorably. This study enriches our understanding of the CSR-firm risk relationship, providing important implications for investors and corporate managers.