Corporate social responsibility, family involvement, and stock price crash risk

This study responds to the call in Vazquez's (2018) by providing more empirical evidence on ethical issues in family business. Drawing from the agency theory, we provide new evidence about the "CSR - stock price crash risk" nexus by examining the moderating effect of family involvement. With a focus on the Chinese capital market, we find that corporate social responsibility (CSR) negatively affects stock price crash risk. Such negative correlation is stronger for family firms as compared with nonfamily firms. Three proxies of family involvement, termly family member as a CEO, lower proportion of variable compensation to CEO, and greater family control, can strengthen the alleviating effect of CSR on crash risk. Nevertheless, a second-generation successor as executive does not exert any moderating effect. Our findings advance the comprehension of the "CSR-crash risk" nexus from the family business viewpoint and emphasize the important role of CSR in stabilizing the stock market.