Corporate social responsibility and bankruptcy

Elizabeth Cooper (Department of Finance, La Salle University, Philadelphia, Pennsylvania, USA)
Hatice Uzun (Department of Finance, Long Island University, Brookville, New York, USA)

Studies in Economics and Finance

ISSN: 1086-7376

Publication date: 24 June 2019



This paper aims to examine corporate social responsibility (CSR) and corporate bankruptcy. Specifically, the authors ask the following research questions: Does CSR play a role in determining the likelihood of bankruptcy? Does CSR explain the difference in the probability of that firm eventually reorganizing and emerging from bankruptcy?


The authors address these questions by testing three CSR theories using a sample of 78 firms that filed for Chapter 11 bankruptcy during the period 2007 to 2014 along with a matched sample of firms that did not.


Overall, the findings indicate that stronger CSR firms are less likely to become bankrupt relative to weaker CSR firms, all else being equal. This result is in line with the stakeholder theory of CSR. However, results do not support the conjecture that CSR matters when it comes to bankruptcy emergence. While CSR seems to influence whether a company experiences bankruptcy in the first place, having strong CSR does not seem to help a firm once it has filed for Chapter 11.

Research limitations/implications

This paper extends the existing CSR literature but looks at CSR not from the angel of financial “success” but rather from financial “failure”.

Practical implications

The results could potentially help academics and practitioners alike in seeking understanding and reason behind CSR involvement and bankruptcy avoidance and success.


This is the first paper to test whether CSR plays a role in bankruptcy. The authors use a recent sample of firms with CSR scores that experienced a bankruptcy and a matched sample of CSR-scored firms that did not experience bankruptcy.



Cooper, E. and Uzun, H. (2019), "Corporate social responsibility and bankruptcy", Studies in Economics and Finance, Vol. 36 No. 2, pp. 130-153.

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