Media pressure, corporate social responsibility, and the risk of share price crash

Abstract

The investigation employs a compilation of data from 5085 listed entities over the period from 2013 to 2022 to explore the dynamics between media coverage, corporate social responsibility initiatives (CSR), and the risk of stock market crashes. The results suggest that greater media focus can elevate the chances of stock value plummeting, whereas robust CSR dedication tends to mitigate such risks. The extent of overall debt funding plays a significant role as an intermediary in the connection between CSR efforts and the threat of equity market meltdowns. Moreover, the influence of the audit services provided by the Big Four firms greatly alters the correlation between CSR endeavors and the probability of market downturns. Additionally, the influence of CSR on the risk of crashes varies based on the profitability of the company. The study proposes that enhancing CSR execution, maintaining moderate levels of financial leverage, and optimizing approaches to media relations can all contribute to reducing the likelihood of stock market crashes.