Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Does CSR Really Enhance Sustainability?: A Perspective of Business Cycle

  • Jeong, Kwang-Hwa (College of Business Administration, Kangwon National University) ;
  • Lee, Sejoong (College of Business Administration, University of Seoul)
  • Received : 2021.02.28
  • Accepted : 2021.03.25
  • Published : 2021.03.31
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Abstract

Purpose - The purpose of this study is to investigate the effect of macroeconomic conditions on the relationship between CSR and firm value. Design/methodology/approach - Employing KEJI index as a proxy for a firm's CSR activities, we investigate whether investors discount the value of CSR activity during the economic recession when a firm's bankruptcy risk is high and thus its future sustainability is suspected. Findings - Our empirical result represents that the value of a firm with high CSR score is undervalued during recession, reflecting investors doubt the sustainability of a firm whose CSR score is high when overall economy is exposed to high downside risk. Research implications or Originality - It implies that investors may not regard the CSR activities as an indicator of corporate sustainability. Also, the result represents that stable macroeconomic condition can be one of the important factors to make the CSR activity increase a firm's value.

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