CSR influences corporate risk taking

What is it about?

CSR serves as a control mechanism to reduce deviations from optimal risk taking, and therefore, CSR curbs excessive risk taking and reduces excessive risk avoidance.

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Why is it important?

This study provides some implications for regulators considering CSR-related policies and for corporate boards designing an incentive system that incorporates CSR performance as internal control mechanisms to reduces both excessive and insufficient risk taking that have a detrimental effect on shareholder wealth.