Where does corporate social capital matter the most? Evidence From the COVID-19 crisis

Fiordelisi F. Galloppo G. Lattanzio G.
June 2022 Elsevier Ltd

Finance Research Letters
2022 #47

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 countrys labor market as a critical determinant of corporates returns on social capital-related investments. These findings are consistent with social capital hedging firms against systematic shocks by mitigating employee-related litigation risk.

Corporate social capital , COVID-19 , Labor market rigidity , Reputational capital , Stakeholders

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Essex Business School, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ, United Kingdom
Department of Economics and Business, University of Viterbo La Tuscia, Via del Paradiso47, Viterbo, 01100, Italy
Nazarbayev University, Department of Finance, Turan Ave, Nur-Sultan, 0200000, Kazakhstan

Essex Business School
Department of Economics and Business
Nazarbayev University

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