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Where Does Corporate Social Capital Matter the Most? Evidence From the COVID-19 Crisis

Fiordelisi, Franco and Lattanzio, Gabriele and Galloppo, Giuseppe (2022) 'Where Does Corporate Social Capital Matter the Most? Evidence From the COVID-19 Crisis.' Finance Research Letters, 47. p. 102538. ISSN 1544-6123

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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.

Item Type: Article
Uncontrolled Keywords: Corporate Social Capital; Labor Market Rigidity; Reputational Capital; COVID-19; Stakeholders
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 08 Nov 2021 20:31
Last Modified: 15 Jun 2022 07:58
URI: http://repository.essex.ac.uk/id/eprint/31457

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