Study On The Financial Risk Based On Corporate Social Responsibility

In recent years, there have been many scandals of corporate socialresponsibility(CRS), caused by product quality, environmental pollution andemployee benefit. These have not only ruined the image of related Corporate, but ledto financial crisis, even bankruptcy.Due to the improvement of corporate socialresponsibility reporting system and the public’s concern on CSR, how an enterprisecarrys its duty will have more and more influence on its own existence anddevelopment. With a changeable economical environment, more challenges are facedby traditional financial risk estimating methods. The formation of financial crisis inmodern enterprise is the result caused by different interests among stakeholders. Howto estimate accurately and avoid financial risk is a problem that needs all stakeholdersto meet and solve mutually. Therefor, it has very actual value to investigate theinfluence CSR exerting on financial crisis and through the carry-out of CSR, to aidthe estimation of financial crisis.This essay,on the basis of the previous researches, first elaborates stakeholdertheory, enterprise social contract theory,signaling theory and Enterprise riskmanagement theory, defines and analyses the relationship between CSR and financialrisk. Also, analyses in detail the extent to which CSR influences financial risk, fromstockholder, creditor, employee, customer, government, public welfare andenvironment these seven aspects. Then apply empirical study method.Take thefinancial report of A share listed company and CSR reporting data as examples, andmake an empirical test on how CSR influences financial risk. It’s finally proved thatbetter performed CSR helps reduce financial risk. By the empirical analysis results,several useful CSR indexes will be chosen to aid the judging of financial risk andimprove traditional financial risk alert modeling. At last, according to researchresults,proposals for enterprise’s financial risk management and its consciouslyfulfilling of social responsibility are mentioned.