Journal article
Corporate social performance, retail investor trading, and stock price crash risk
Finance research letters, v 101, 110055
Jul 2026
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Abstract
• Corporate social performance (CSP) significantly lowers stock price crash risk.
• The CSP–risk link is stronger for firms with higher retail investor participation.
• CSP stabilizes prices through an investor attention–based behavioral channel.•Civil charity is the most influential social dimension in reducing firm downside risk.
• Dynamic GMM and Heckman models reinforce that the results are robust to endogeneity.
We investigate the relationship between corporate social performance (CSP) and stock price crash risk in Taiwan, a market dominated by retail investors. While prior literature primarily focuses on environmental performance and institutional monitoring channels, relatively little is known about whether and how investors, particularly retail investors, respond to firms’ social engagement. We find that higher CSP is associated with lower crash risk, and that this relation is stronger among firms with greater retail trading intensity. The results are robust to alternative specifications, including a two-stage Heckman selection model, a dynamic system GMM estimator, and alternative measures. These findings suggest that in retail-dominated markets, CSP affects downside risk through investor behavior, consistent with an attention- and reputation-based channel. Overall, our study highlights that the asset pricing implications of CSP depend on investor composition and are more pronounced when retail participation is high.
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Details
- Title
- Corporate social performance, retail investor trading, and stock price crash risk
- Creators
- Chang Chan - Dharma Drum Institute of Liberal ArtsCalvin J. Chiou - National Chengchi UniversityChin-En Wu - Drexel University, Bennett S. LeBow College of Business
- Publication Details
- Finance research letters, v 101, 110055
- Publisher
- Elsevier Inc
- Grant note
- 112–2410-H-305–056-MY2; 113–2410-H-004–007 / National Science and Technology Council (https://doi.org/10.13039/100020595)
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Bennett S. LeBow College of Business
- Web of Science ID
- WOS:001756527100001
- Other Identifier
- 991022189174704721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance