Research objective:To determine the impact of corporate social responsibility disclosure on investment efficiency and stock price crash risk, in addition to determining the impact of corporate social responsibility disclosure on stock price Crash risk for over-and under-investment companies, in light of the theories explaining the motives for social responsibility disclosure addressed by accounting literature and the extent to which the research results agree with these theories.
Design and methodology:The research relied on the applied study by applying it to a sample representing (34) companies listed on the EGX 100 index, which were selected according to a set of determinants with a total number of (170) observations and distributed over a group of sectors for the period from 2017-2021.The research relied on measuring the independent variable: Corporate social responsibility disclosure based on the (ESG Score) obtained by each of the sample companies for the three dimensions of environmental, social and governance, and to measure the dependent variables: investment efficiency according to the study model of Biddle et al. (2009), and stock price crash risk according to the negative skewness coefficient of returns (NCSKEW) and the volatility of returns from the bottom up (DUVOL), and the control variables (company size, financial leverage, return on assets, market value of book value, operating cash flows) based on the content analysis approach of the financial statements and supplementary explanations and reports available on the companies’ websites or some other websites, and to test the research hypotheses, a set of statistical methods was relied upon, such as Pearson’s correlation coefficient and multiple linear regression models.
Research Results:There is a statistically significant positive (negative) effect of corporate social responsibility disclosure on investment efficiency (inefficiency investment) and a statistically significant negative effect of corporate social responsibility disclosure on over- and under-investment, which is consistent with the perspective of the signaling and stakeholder theories.
There is a positive and significant correlation between corporate social responsibility disclosure and the risk of stock price crash, which is consistent with the perspective of the agency theory, and there is a statistically significant positive effect of corporate social responsibility disclosure and the risk of stock price crash for over- and under-investment companies, and the positive relationship was more evident for under-investment companies.
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