Corporate Social Responsibility and Risk: Evidence from various countries

Abstract

This study investigates the relationship between corporate social responsibility and default risk. The usage of a significant sample size of companies from 42 nations between 2006 and 2020, this investigation examines the connection between corporate social responsibility (CSR) and counterparty risk, concentrating on the discrepancy impact conditional on the intervals of time limits. We discover that corporate social responsibility is negatively related to the default probability, and the impact is more potent in the long run than in the short term. In addition, the effect of corporate social responsibility on company nonpayment probability seems to be more significant in international locations with weaker securities markets and legal institutions. This study is unique in the field of CSR and Default risk. Our results generally assist corporate social responsibility's position in filling institutional voids.