The Moderating Role of Corporate Social Responsibility in Market Reactions to Financial Misconduct
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2025-07-04
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en
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This thesis investigates whether Corporate Social Responsibility (CSR) moderates investor responses to announcements of financial misconduct, including tax violations, anti-money laundering deficiencies, and accounting fraud. Using an event study methodology, it examines short-term cumulative abnormal returns (CARs) for a sample of 80 violation cases and 157 matched control firms. Firms were matched on financial and industry characteristics using a propensity score matching algorithm implemented with the MatchIt package in R. CSR performance was measured using the Refinitiv ESG Combined Score, and firms were categorized into tiers, focusing on the top 25% (HighCSR) for regression analyses. The results show no statistically significant market reactions to the misconduct events, nor a consistent moderating effect of CSR. A power analysis confirms low statistical power to detect small effects, particularly for interaction terms. These findings show the empirical limitations in capturing the reputational role of CSR and suggest that future studies require larger samples and refined CSR measures.
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Faculteit der Managementwetenschappen