Can CSR mitigate negative regional public sentiment? Evidence from major violent crimes in China

In the information age, major negative events can spread quickly and affect investors' perceptions and decisions. Using data on major violent crime events in China, we investigate the role of corporate social responsibility (CSR) in mitigating negative regional public sentiment. We find that firms with high CSR performance have better stock returns on event days. We also find that investors react more positively to firms engaging in technical CSR activities (those targeting a firm's primary stakeholders) than to those engaging in institutional CSR activities (those serving the public). Moreover, this effect is more pronounced in firms with better internal control and higher information transparency. This study documents the positive role of CSR in securing firm value in the face of negative public sentiment.