The value of CSR during the COVID-19 crisis: Evidence from Chinese firms

Using a sample of 3013 Chinese listed firms, we study the impact of Chinese firms' corporate social responsibility (CSR) engagement on their stock returns during the COVID-19 crisis. We find that firms with more pre-crisis CSR engagement have worse crisis-period stock returns. The effect is larger for firms with more agency problems, less access to external financing, or worse pre-crisis financial conditions. Firms with more pre-crisis CSR engagement also show poorer post-crisis operating performance. Our results suggest that agency problems motivate Chinese managers to overinvest in costly CSR practices, which harms firm value during the unexpected crisis and impedes the firm's recovery from it.