The Research On The Relationship Between Corporate Social Responsibility And Idiosyncratic Risk

Since 2008 regulatory authorities require part of the public companies disclose corporate social responsibility report, so the impact of corporate social responsibility become a research hot topic in recent years.The existing research mostly research on the relationship between corporate social responsibility and financial performance or stock returns, and the researches didn’t reach a persuasive conclusion. This article comes from the perspective of the relationship between corporate social responsibility and idiosyncratic risk,discuss whether corporate social responsibility can lower the idiosyncratic risk and ultimately achieve the goal of enhancing the interest of shareholders.This article selects 313 listed companies of 2009-2011 as research samples.Based on stakeholder theory, I propose that corporate social responsibility affect idiosyncratic risk through influencing stakeholders; Based on the theory of risk management, I propose that enterprise managers can achieve the goal of risk management by disclosing corporate social responsibility, and further discuss the adjustment variables. The above establishes the theoretical framework.In this paper, corporate social responsibility disclosure scores are taken from Rankings CSR Ratings database. Idiosyncratic risk is calculated according to Fama-French three factor model. According to the results of these two indicators and other control variables as panel data of multivariate linear regression, the article studies the relation between corporate social responsibility and risk characteristics, and discusses the degree of the financial leverage,advertising expenditure and R&D spending affect the correlation relationship.The empirical analysis results show that the better the companies disclose the corporate social responsibility the lower idiosyncratic risk they will face.Also this article conclude that when companies face high financial leverage, the correlation of the two is subdued, and high advertising spending could enhance the negative correlation between them, but R&D spending has not been able to prove that it has significant influence on the correlation.This paper puts forward corresponding suggestions for enterprise managers.In this paper, I discuss the relationship between the corporate social responsibility and idiosyncratic risk based on China’s listed companies. This article fills the gaps in the domestic researches and has certain theoretical and practical significance.