WHERE DOES CORPORATE SOCIAL CAPITAL MATTER THE MOST? EVIDENCE FROM THE COVID-19 CRISIS
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Date
2021-11-10
Authors
Fiordelisi, Franco
Galloppo, Giuseppe
Lattanzio, Gabriele
Journal Title
Journal ISSN
Volume Title
Publisher
Finance Research Letters
Abstract
Firms with high social capital systematically outperform their peers during periods of economic distress. Yet, it is not clear under which institutional conditions corporate social capital is the most valuable to shareholders. By studying the performance of 1,789 firms in 27 countries during the initial phases of the COVID-19 pandemic, we document that the resilience effect of social capital is heterogeneous across countries. We identify the flexibility of a country's labor market as a critical determinant of corporate's returns on social capital-related investments. These findings are consistent with social capital hedging firms against systematic shocks by mitigating employee-related litigation risk.
Description
Keywords
Type of access: Open Access, Corporate social capital, Labor market rigidity, Reputational capital, COVID-19, Stakeholders
Citation
Fiordelisi, F., Galloppo, G., & Lattanzio, G. (2021). Where does corporate social capital matter the most? Evidence From the COVID-19 crisis. Finance Research Letters, 102538. https://doi.org/10.1016/j.frl.2021.102538