The Reactive Strategy During the COVID-19 Crisis: A New String to the Bow of CSR

This study aims to study the impact of the COVID-19 outbreak on stock market performance and determine whether firms with a reactive corporate social responsibility (CSR) strategy (compared to those with a proactive and strategic strategy) were less affected. Focusing on a sample of 217 French firms, the event study approach is applied to examine change in the stock prices of socially responsible firms at the announcement of COVID-19 as a pandemic. The results show that stock prices dropped significantly as a reaction to the COVID-19 outbreak, particularly for the proactive CSR group compared to the reactive CSR group. The results also show that the reactive CSR group resisted more in the longer term. Furthermore, an investment strategy aiming at buying reactive CSR firms and or selling proactive ones would have earned abnormal returns. However, the investment strategy is not fruitful when we consider reactive CSR stocks and strategic firms.