International Journal of Nonlinear Analysis and Applications
The protective role of corporate social responsibility performance during the coronavirus pandemic disease: Performance evaluation using a mathematical model of the directional distance function
Document Type : Research Paper
Authors
1 Department of Accounting, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran
2 Department of Management, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran
Abstract
The outbreak of coronavirus worldwide has created many problems for companies. Companies are looking for a suitable solution to overcome this crisis. One of the measures that can reduce the negative effects of this crisis is the expansion of corporate social responsibility(CSR) activities. The purpose of this study was to investigate the protective role of the performance of CSR activities from stock returns and its effect on shareholder attention during coronary heart disease. This study is an event study that is considered for a period of six months from the beginning of the outbreak of coronavirus in Iran (February 2020) to the end of August 2020. The data analysis was performed using Eviews software and information of 33 sample member companies listed on the Tehran Stock Exchange, in three industries: pharmaceutical, food, and transportation, by least squares regression (OLS) method. The results show that the performance of CSR activities related to community indicators, employee relations, and human rights in the event periods have a positive role on the corporate stock returns and other activities do not play an effective role. The results also show that the performance of CSR has a positive and significant effect on the attention of shareholders. Using the obtained results, it can be concluded that corporations can attract stakeholders and protect the value of the companies by increasing the performance of CSR activities, especially in the community, employee relations, and human rights during the coronavirus pandemic disease period.
Keywords
[1] H. Aguinis, I. Villamor and K.P. Gabriel, Understanding employee responses to COVID-19: a behavioral corporate
social responsibility perspective, Manag. Res. 18 (2020), no. 4, 421–438.
[2] J. Aparicio and M. Kapelko, Enhancing the measurement of composite indicators of corporate social performance,
Soc. Indic. Res. 144 (2019), 807—826.
[3] M.M. Arthur and A. Cook, Taking stock of work-family initiatives: how announcements of “family-friendly human
resource decisions affect shareholder value, Ind. Labor Relat. Rev. 57 (2004), no. 4, 599—613.
[4] A.K.M. Au and M.C.H. Yeung, The effects of SARS on the Hong Kong tourism industry: an empirical evaluation,
Asia Pacific J. Tour. Res. 10 (2005), no. 1, 85-–95.
[5] R. Baldwin and B.W. di Mauro, Economics in the Time of COVID19, CEPR Press, 2020.[6] R.J. Batty. G. Cuskelly and K. Toohey, Community sport events and CSR sponsorship: examining the impacts
of a public health agenda, J. Sport Soc. Issues 40 (2016), no. 6, 1-–20.
[7] S. Brammer, L. Branicki and M. Linnenluecke, COVID-19, societalization and the future of business in society,
Acad. Manag. Perspect. 34 (2020), no. 4, 493–507.
[8] S.J. Brown and J.B. Warner, Using daily stock returns: the case of event studies, J. Finance Econ. 14 (1985), no.
1, 3-–31.
[9] M.G. Bruna and D. Nicol`o, Corporate Reputation and Social Sustainability in the early stages of start-ups: a
theoretical model to match stakeholders’ expectations through Corporate Social Commitment, Finance Res. Lett.
35 (2020), 101508.
[10] A.B. Carroll, Corporate social: responsibility evolution of a definitional construct, Bus. Soc. 38 (1999), no. 3,
268—295.
[11] T. Chen, H. Dong and C. Lin, Institutional shareholders and corporate social responsibility, J. Financ. Econ. 135
(2020), no. 2, 483–504.
[12] M.H. Chen, S. Jang and W.G. Kim, The impact of the SARS outbreak on Taiwanese hotel stock performance: an
event-study approach, Int. J. Hosp. Manag. 26 (2007), no. 1, 200—212.
[13] S. Corbet, C. Larkin and B. Lucey, The contagion effects of the covid-19 pandemic: evidence from gold and
cryptocurrencies, Finance Res. Lett. 35 (2020), 101554.
[14] D. Foroughi, H. Amiri and M. Javanmard, The effect of corporate social responsibility on cash retention through
the simultaneous effect of selected variables, Financial Account. Res. 10 (2018), no. 1, 19–36.
[15] I.M. Garc´ıa-S´anchez, The moderating role of board monitoring power in the relationship between environmental
conditions and corporate social responsibility, Bus. Ethics. 29 (2020), 114—129.
[16] I.M. Garc´ıa-S´anchez and A. Garc´ıa-S´anchez, Corporate social responsibility during COVID-19 pandemic, J. Open
Innov. Technol. Market Complexity 6 (2020), no. 4, 126.
[17] I.M. Garc´ıa-S´anchez, L. Rodr´ıguez-Ariza, B. Aibar-Guzm´an and C. Aibar-Guzm´an, Do institutional investors
drive corporate transparency regarding business contribution to the sustainable development goals?, Bus. Strategy
Environ. 29 (2020), 2019—2036.
[18] J.W. Goodell, COVID-19 and finance: agendas for future research, Finance Res. Lett. 35 (2020), 101512.
[19] H. Grossi, N. Izadinia and M. Dastgir, The effect of the level of disclosure of social responsibility on the market
value of the company, Financ. Account. Audit. Res. 12 (2020), no. 46, 51–76.
[20] V. Grougiou, S. Leventis, E. Dedoulis and S. Owusu-Ansah, Corporate social responsibility and earnings management in U.S. banks, Account. Forum 38 (2014), no. 3, 155–169.
[21] H.M. Gu and G. Wall, SARS in China: tourism impacts and market rejuvenation, Tour. Anal. 11 (2006), 367—
379.
[22] D.M. Hadi, S. Katircioglu and C. Adaoglu, The vulnerability of tourism firms’ stocks to the terrorist incidents,
Curr. Issues Tour. 23 (2020), no. 9, 1138-–1152.
[23] Z. Hajiha and A. Shakeri, Corporate governance, disclosure of social responsibility and company value, Financial
Account. Audit. Res. 11 (2019), no. 44, 175–192.
[24] Y. Hasas Yeganeh, H.A. Sohrabi and M. Rood Kenari, The relationship between social responsibility reporting
and company value, Financial Account. Audit. Res. 12 (2020), no. 45, 1–20.
[25] H. He and L. Harris, The impact of Covid-19 pandemic on corporate social responsibility and marketing philosophy,
J. Bus. Res. 116 (2020), 176—182.
[26] M. Kazempour, M. Kashanipour, H. Yazdifar and A. Hamidizadeh, A framework for ranking corporate social
responsibility disclosure, Financial Account. Res. 12 (2020), no. 1, 124–103.
[27] S.S. Kim, H.J. Chun and H. Lee, The effects of SARS on the Korean hotel industry and measures to overcome
the crisis: a case study of six Korean five-star hotels, Asia Pacific J. Tour. Res. 10 (2005), no. 4, 369-–377.[28] A. Kulachinskaya, I.G. Akhmetova, V.Y. Kulkova and S.B. Ilyashenko, The challenge of the energy sector of
Russia during the 2020 COVID-19 pandemic through the example of the Republic of Tatarstan: discussion on the
change of open innovation in the energy sector, J. Open Innov. Technol. Mark. Complexity 6 (2020), no. 3, 60.
[29] S. Lee, M. Singal, K.H. Kang, The corporate social responsibility – financial performance link in the US restaurant
industry: do economic conditions matter?, Int. J. Hosp. Manag. 32 (2013), no. 1, 2—10.
[30] W. Li, G. Xu, D. Zuo and J. Zhu, Corporate social responsibility performance-evaluation based on analytic hierarchy process-fuzzy comprehensive, Wireless Personal Commun. 118 (2021), no. 4, 2897–2919.
[31] K.V. Lins, H. Servaes and A. Tamayo, Social capital, trust, and firm performance: the value of corporate social
responsibility during the financial crisis, J. Finance 72 (2017), no. 4, 1785-–1824.
[32] P.M. Madsen, Z.J. Rodgers, Looking good by doing good: the antecedents and consequences of stakeholder attention
to corporate disaster relief, Strategic Manag. J. 36 (2015), 776—794.
[33] A. Mahmud, D. Ding and M.M. Hasan, Corporate social responsibility: business responses to coronavirus (COVID19) pandemic, SAGE Open 11 (2021), no. 1, 1–17.
[34] M. Malik, Value-enhancing capabilities of CSR: a brief review of contemporary literature, J. Bus. Ethics 127
(2015), 419-–438.
[35] S. McLennan and G. Banks, Reversing the lens: why corporate social responsibility is not community development,
Cor. Soc. Respons. Environ. Manag. 26 (2019), no. 1, 117—126.
[36] R.K. Mitchell, B.R. Agle and D.J. Wood, Toward a theory of stakeholder identification and salience: defining the
principle of who and what really counts, Acad. Manag. Rev. 22 (1997), no. 4, 853—886.
[37] V. Ponkratov, N. Kuznetsov, N. Bashkirova, M. Volkova, M. Alimova, M. Ivleva, L. Vatutina and I. Elyakova, Predictive scenarios of the Russian oil industry; with a discussion on macro and micro dynamics of open innovation
in the COVID 19 pandemic, J. Open Innov. Technol. Mark. Complexity 6 (2020), no. 3, 85.
[38] M.C.A. Portela, E. Thanassoulis and G. Simpson, Negative data in DEA: a directional distance function approach
applied to bank branches, J. Operat. Res. Soc. 55 (2004), no. 10, 1111–1121.
[39] M.S. Rizwan, G. Ahmad and D. Ashraf, Systemic risk: the impact of COVID-19, Finance Res. Lett. 29 (2020),
101682.
[40] S. Rodriguez-Gomez, M.L. Arco-Castro, M.V. Lopez-Perez and L. Rodr´ıguez-Ariza, Where does CSR come from
and where does it go? a review of the state of the art, Adm. Sci. 10 (2020), no. 3, 60.
[41] S. Seo, S.S. Jang, L. Miao, B. Almanza and C. Behnke, The impact of food safety events on the value of food-related
firms: an event study approach, Int. J. Hosp. Manag. 33 (2013), 153—165.
[42] Q. Shangzhi, J. Jianing, L. Xinming, C. Ming-Hsiang and Y. Xina, Can corporate social responsibility protect
firm value during the COVID-19 pandemic?, Int. J. Hospital. Manag. 93 (2021), no. 1, 1–12.
[43] K. Shehzad, X. Liu and H. Kazouz, COVID-19’s disasters are more perilous than global financial crisis: a rumor
or fact?, Finance Res. Lett. 36 (2020), 101669.
[44] Y. Shiu and S. Yang, Does engagement in corporate social responsibility provide strategic insurance-like effects?,
Strategic Manag. J. 38 (2017), no. 2, 455-–470.
[45] M. Singal, How is the hospitality and tourism industry different? an empirical test of some structural characteristics, Int. J. Hosp. Manag. 47 (2015), 116—119.
[46] T. Tan and B. Kalyebara, Can investors benefit from corporate social responsibility and portfolio model during
the Covid19 pandemic?, Account. 7 (2021), no. 5, 1033—1048.
[47] Q. Wang, J. Dou and S. Jia, A meta-analytic review of corporate social responsibility and corporate financial
performance: the moderating effect of contextual factors, Bus. Soc. 55 (2015), no. 8, 1—39.
[48] S.L. Yang, A. Chang, Y.H. Chen, Y.M. Shiu, Can country trade flows benefit from improved corporate social
responsibility ratings?, Econ. Modell. 80 (2019), 192-–201.
[49] A. Zandi and F. Rahnamaei Roodposhti, The effect of the number of shareholders on the behavior and value ofcompanies based on the two models of Yang, and Ustaruk and Austenberg, Quart. J. Financ. Engin. Secur. Manag.
10 (2019), no. 38, 117–144.
[50] Q. Zarei, H. Rahimi and A. Haghverdizadeh, Corona virus crisis and corporate social responsibility mismanagement: analyzing the reaction of social media users to negative news about CSR issues, Int. Bus. Manag. 3 (2020),
no. 10, 33–52.
[51] H. Zhai, M. Xiao, K.C. Chan and Q. Liu, Physical proximity, corporate social responsibility, and the impact of
negative investor sentiment on stock returns: evidence from COVID-19 in China, Int. Rev. Finance 2021 (2021),
1–7.
[52] D. Zhang, M. Hu and Q. Ji, Financial markets under the global pandemic of COVID- 19, Finance Res. Lett. 36
(2020), 101528.
[53] A. Zopiatis, C.S. Savva, N. Lambertides and M. McAleer, Tourism stocks in times of crisis: an econometric
investigation of unexpected nonmacroeconomic factors, J. Travel. Res. 58 (2019), no. 3, 459–479.
social responsibility perspective, Manag. Res. 18 (2020), no. 4, 421–438.
[2] J. Aparicio and M. Kapelko, Enhancing the measurement of composite indicators of corporate social performance,
Soc. Indic. Res. 144 (2019), 807—826.
[3] M.M. Arthur and A. Cook, Taking stock of work-family initiatives: how announcements of “family-friendly human
resource decisions affect shareholder value, Ind. Labor Relat. Rev. 57 (2004), no. 4, 599—613.
[4] A.K.M. Au and M.C.H. Yeung, The effects of SARS on the Hong Kong tourism industry: an empirical evaluation,
Asia Pacific J. Tour. Res. 10 (2005), no. 1, 85-–95.
[5] R. Baldwin and B.W. di Mauro, Economics in the Time of COVID19, CEPR Press, 2020.[6] R.J. Batty. G. Cuskelly and K. Toohey, Community sport events and CSR sponsorship: examining the impacts
of a public health agenda, J. Sport Soc. Issues 40 (2016), no. 6, 1-–20.
[7] S. Brammer, L. Branicki and M. Linnenluecke, COVID-19, societalization and the future of business in society,
Acad. Manag. Perspect. 34 (2020), no. 4, 493–507.
[8] S.J. Brown and J.B. Warner, Using daily stock returns: the case of event studies, J. Finance Econ. 14 (1985), no.
1, 3-–31.
[9] M.G. Bruna and D. Nicol`o, Corporate Reputation and Social Sustainability in the early stages of start-ups: a
theoretical model to match stakeholders’ expectations through Corporate Social Commitment, Finance Res. Lett.
35 (2020), 101508.
[10] A.B. Carroll, Corporate social: responsibility evolution of a definitional construct, Bus. Soc. 38 (1999), no. 3,
268—295.
[11] T. Chen, H. Dong and C. Lin, Institutional shareholders and corporate social responsibility, J. Financ. Econ. 135
(2020), no. 2, 483–504.
[12] M.H. Chen, S. Jang and W.G. Kim, The impact of the SARS outbreak on Taiwanese hotel stock performance: an
event-study approach, Int. J. Hosp. Manag. 26 (2007), no. 1, 200—212.
[13] S. Corbet, C. Larkin and B. Lucey, The contagion effects of the covid-19 pandemic: evidence from gold and
cryptocurrencies, Finance Res. Lett. 35 (2020), 101554.
[14] D. Foroughi, H. Amiri and M. Javanmard, The effect of corporate social responsibility on cash retention through
the simultaneous effect of selected variables, Financial Account. Res. 10 (2018), no. 1, 19–36.
[15] I.M. Garc´ıa-S´anchez, The moderating role of board monitoring power in the relationship between environmental
conditions and corporate social responsibility, Bus. Ethics. 29 (2020), 114—129.
[16] I.M. Garc´ıa-S´anchez and A. Garc´ıa-S´anchez, Corporate social responsibility during COVID-19 pandemic, J. Open
Innov. Technol. Market Complexity 6 (2020), no. 4, 126.
[17] I.M. Garc´ıa-S´anchez, L. Rodr´ıguez-Ariza, B. Aibar-Guzm´an and C. Aibar-Guzm´an, Do institutional investors
drive corporate transparency regarding business contribution to the sustainable development goals?, Bus. Strategy
Environ. 29 (2020), 2019—2036.
[18] J.W. Goodell, COVID-19 and finance: agendas for future research, Finance Res. Lett. 35 (2020), 101512.
[19] H. Grossi, N. Izadinia and M. Dastgir, The effect of the level of disclosure of social responsibility on the market
value of the company, Financ. Account. Audit. Res. 12 (2020), no. 46, 51–76.
[20] V. Grougiou, S. Leventis, E. Dedoulis and S. Owusu-Ansah, Corporate social responsibility and earnings management in U.S. banks, Account. Forum 38 (2014), no. 3, 155–169.
[21] H.M. Gu and G. Wall, SARS in China: tourism impacts and market rejuvenation, Tour. Anal. 11 (2006), 367—
379.
[22] D.M. Hadi, S. Katircioglu and C. Adaoglu, The vulnerability of tourism firms’ stocks to the terrorist incidents,
Curr. Issues Tour. 23 (2020), no. 9, 1138-–1152.
[23] Z. Hajiha and A. Shakeri, Corporate governance, disclosure of social responsibility and company value, Financial
Account. Audit. Res. 11 (2019), no. 44, 175–192.
[24] Y. Hasas Yeganeh, H.A. Sohrabi and M. Rood Kenari, The relationship between social responsibility reporting
and company value, Financial Account. Audit. Res. 12 (2020), no. 45, 1–20.
[25] H. He and L. Harris, The impact of Covid-19 pandemic on corporate social responsibility and marketing philosophy,
J. Bus. Res. 116 (2020), 176—182.
[26] M. Kazempour, M. Kashanipour, H. Yazdifar and A. Hamidizadeh, A framework for ranking corporate social
responsibility disclosure, Financial Account. Res. 12 (2020), no. 1, 124–103.
[27] S.S. Kim, H.J. Chun and H. Lee, The effects of SARS on the Korean hotel industry and measures to overcome
the crisis: a case study of six Korean five-star hotels, Asia Pacific J. Tour. Res. 10 (2005), no. 4, 369-–377.[28] A. Kulachinskaya, I.G. Akhmetova, V.Y. Kulkova and S.B. Ilyashenko, The challenge of the energy sector of
Russia during the 2020 COVID-19 pandemic through the example of the Republic of Tatarstan: discussion on the
change of open innovation in the energy sector, J. Open Innov. Technol. Mark. Complexity 6 (2020), no. 3, 60.
[29] S. Lee, M. Singal, K.H. Kang, The corporate social responsibility – financial performance link in the US restaurant
industry: do economic conditions matter?, Int. J. Hosp. Manag. 32 (2013), no. 1, 2—10.
[30] W. Li, G. Xu, D. Zuo and J. Zhu, Corporate social responsibility performance-evaluation based on analytic hierarchy process-fuzzy comprehensive, Wireless Personal Commun. 118 (2021), no. 4, 2897–2919.
[31] K.V. Lins, H. Servaes and A. Tamayo, Social capital, trust, and firm performance: the value of corporate social
responsibility during the financial crisis, J. Finance 72 (2017), no. 4, 1785-–1824.
[32] P.M. Madsen, Z.J. Rodgers, Looking good by doing good: the antecedents and consequences of stakeholder attention
to corporate disaster relief, Strategic Manag. J. 36 (2015), 776—794.
[33] A. Mahmud, D. Ding and M.M. Hasan, Corporate social responsibility: business responses to coronavirus (COVID19) pandemic, SAGE Open 11 (2021), no. 1, 1–17.
[34] M. Malik, Value-enhancing capabilities of CSR: a brief review of contemporary literature, J. Bus. Ethics 127
(2015), 419-–438.
[35] S. McLennan and G. Banks, Reversing the lens: why corporate social responsibility is not community development,
Cor. Soc. Respons. Environ. Manag. 26 (2019), no. 1, 117—126.
[36] R.K. Mitchell, B.R. Agle and D.J. Wood, Toward a theory of stakeholder identification and salience: defining the
principle of who and what really counts, Acad. Manag. Rev. 22 (1997), no. 4, 853—886.
[37] V. Ponkratov, N. Kuznetsov, N. Bashkirova, M. Volkova, M. Alimova, M. Ivleva, L. Vatutina and I. Elyakova, Predictive scenarios of the Russian oil industry; with a discussion on macro and micro dynamics of open innovation
in the COVID 19 pandemic, J. Open Innov. Technol. Mark. Complexity 6 (2020), no. 3, 85.
[38] M.C.A. Portela, E. Thanassoulis and G. Simpson, Negative data in DEA: a directional distance function approach
applied to bank branches, J. Operat. Res. Soc. 55 (2004), no. 10, 1111–1121.
[39] M.S. Rizwan, G. Ahmad and D. Ashraf, Systemic risk: the impact of COVID-19, Finance Res. Lett. 29 (2020),
101682.
[40] S. Rodriguez-Gomez, M.L. Arco-Castro, M.V. Lopez-Perez and L. Rodr´ıguez-Ariza, Where does CSR come from
and where does it go? a review of the state of the art, Adm. Sci. 10 (2020), no. 3, 60.
[41] S. Seo, S.S. Jang, L. Miao, B. Almanza and C. Behnke, The impact of food safety events on the value of food-related
firms: an event study approach, Int. J. Hosp. Manag. 33 (2013), 153—165.
[42] Q. Shangzhi, J. Jianing, L. Xinming, C. Ming-Hsiang and Y. Xina, Can corporate social responsibility protect
firm value during the COVID-19 pandemic?, Int. J. Hospital. Manag. 93 (2021), no. 1, 1–12.
[43] K. Shehzad, X. Liu and H. Kazouz, COVID-19’s disasters are more perilous than global financial crisis: a rumor
or fact?, Finance Res. Lett. 36 (2020), 101669.
[44] Y. Shiu and S. Yang, Does engagement in corporate social responsibility provide strategic insurance-like effects?,
Strategic Manag. J. 38 (2017), no. 2, 455-–470.
[45] M. Singal, How is the hospitality and tourism industry different? an empirical test of some structural characteristics, Int. J. Hosp. Manag. 47 (2015), 116—119.
[46] T. Tan and B. Kalyebara, Can investors benefit from corporate social responsibility and portfolio model during
the Covid19 pandemic?, Account. 7 (2021), no. 5, 1033—1048.
[47] Q. Wang, J. Dou and S. Jia, A meta-analytic review of corporate social responsibility and corporate financial
performance: the moderating effect of contextual factors, Bus. Soc. 55 (2015), no. 8, 1—39.
[48] S.L. Yang, A. Chang, Y.H. Chen, Y.M. Shiu, Can country trade flows benefit from improved corporate social
responsibility ratings?, Econ. Modell. 80 (2019), 192-–201.
[49] A. Zandi and F. Rahnamaei Roodposhti, The effect of the number of shareholders on the behavior and value ofcompanies based on the two models of Yang, and Ustaruk and Austenberg, Quart. J. Financ. Engin. Secur. Manag.
10 (2019), no. 38, 117–144.
[50] Q. Zarei, H. Rahimi and A. Haghverdizadeh, Corona virus crisis and corporate social responsibility mismanagement: analyzing the reaction of social media users to negative news about CSR issues, Int. Bus. Manag. 3 (2020),
no. 10, 33–52.
[51] H. Zhai, M. Xiao, K.C. Chan and Q. Liu, Physical proximity, corporate social responsibility, and the impact of
negative investor sentiment on stock returns: evidence from COVID-19 in China, Int. Rev. Finance 2021 (2021),
1–7.
[52] D. Zhang, M. Hu and Q. Ji, Financial markets under the global pandemic of COVID- 19, Finance Res. Lett. 36
(2020), 101528.
[53] A. Zopiatis, C.S. Savva, N. Lambertides and M. McAleer, Tourism stocks in times of crisis: an econometric
investigation of unexpected nonmacroeconomic factors, J. Travel. Res. 58 (2019), no. 3, 459–479.
)
Volume 13, Issue 2
July 2022Pages 1865-1878
- Receive Date: 07 September 2021
- Revise Date: 07 October 2021
- Accept Date: 29 November 2021