Does CSR help reduce firm risk during a financial crisis : Evidence from listed Indonesian corporations

Abstract

A corporation’s Corporate Social Responsibility provides insight into how it is being managed. Corporations with good CSR performance have shown that CSR can be used as a tool to enhance a corporation’s image and reduce its firm risk. The Covid-19 pandemic provides a valuable exercise to help examine the relation between CSR and firm risk during a financial recession. This study aims to give a deeper insight towards how CSR and its parts affects firm risk through its usage of a CSR Index score, instead of using disclosure data. This paper examines a sample of 40 firms listed on the Indonesian Stock Exchange (IDX) from 2018 to 2021. This paper expects to find that CSR negatively affects a firm’s total risk and systematic risk.

Keywords: CSR, Firm Risk, Risk Reduction, Indonesia, Covid-19, Recession