An Examination of The Impact of Corporate Social Responsibility on Firm Risk Using a Theoretical Analysis.

Abstract

The objective of this study is to ascertain whether there is a correlation between risk and corporate social responsibility (CSR) in a sample of Pakistani enterprises. The approach employed by the authors is distinguished by three main attributes. The writers utilize a range of CSR projects to demonstrate the significance of CSR in organizational risk assessment. During the later phase of their inquiry, the writers attempt to identify non-linear connections by distinguishing between the positive and negative aspects of CSR. In addition, the authors avoid combining panel data into a single cross-section and employ a risk assessment technique that considers anticipated fluctuations in a company's performance. When evaluating the relationship between risk and corporate social responsibility (CSR), it is essential to carefully analyze both internal and interorganizational differences. The writers emphasize in their concluding conclusion that CSR involves not just corporate governance but also diversity and employee interactions. Previous findings support this viewpoint. Furthermore, the authors provide evidence that corporate social responsibility (CSR) characteristics related to diversity and employee interactions are linked to increased risk. The positive impact of corporate social responsibility (CSR) on a company's risk profile can be demonstrated by utilizing aggregate CSR indicators. However, it is important to consider both the possible advantages and disadvantages of CSR. This is because these two items can be simultaneously checked.The ideas of corporate social responsibility (CSR) and its associated advantages and issues are separate and should not be combined into a single metric, as seen from the supplied statistics. An aggregate index may create a false impression among investors that CSR has a smaller influence on corporate risk than it actually does.