The impact of Corporate Social Responsibility on Corporate Risk Taking and Firm Value

University essay from Lunds universitet/Företagsekonomiska institutionen

Abstract: The aim of the study is to shed light on how CSR activities affect firm value through its impact on corporate risk taking. We formed a panel data sample based on the European market and analyzed it by random effects models. The theoretical frameworks of this thesis are Stakeholder theory, Shareholder theory, Agency theory, and Risk management theory. The sample consists of all the public listed European companies which disclosed ESG score within the period from 2014 to 2018. We found that the joint effect of CSR and corporate risk taking has a positive impact on firm value. In addition, by investigating the relationship between CSR performance, the deviations from the optimal risk taking, and firm value, we found that involving in CSR activities reduces the deviation from the optimal risk taking which increases the firm value.

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