Corporate Social Responsibility policies and Shareholder reactions during the Great Recession

Abstract: This study aims to provide understanding of the relationship between firm changes in CSR policies and the reaction of shareholders through using the Great Recession as an external shock on the Northern European market. Firm and shareholder reactions to the Great Recession are examined using a quantitative approach, where stock price is used as a measure to quantify shareholder reactions. The results do not support pre-crisis CSR scores having a moderating effect on the relationship between CSR changes and stock price. Moreover, the study does not provide empirical evidence determining which CSR activities are valued highest by firms or shareholders. However, data supports that firms reduced their social policies during the Great Recession while shareholders responded positively to increases in environmental policies during the same period.