Can corporate social responsibility protect firm value during corporate environmental violation events?

This study examines how corporate social responsibility and critical stakeholder (media and analyst) attention affect firm value when an environmental violation occurs. We discover that corporate social responsibility acts as a buffer in influencing firm value by analyzing 224 environmental violation events that occurred in China's publicly traded manufacturing industry firms between 2015 and 2020. Moreover, we find that the corporate social responsibility buffering effect is more substantial when media and analyst attention is high (vs. low). By studying the effects of corporate social responsibility on firm value at the onset of an environmental violation event, this study offers further support for the risk management and reputation insurance theory of corporate social responsibility. It also enriches our understanding of the relationship between corporate social responsibility and financial performance.