Corporate Social Responsibility and Equity-Holder Risk in the Hospitality Industry [Summary]

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Virginia Tech


The research studied how CSR increases the firm interest of shareholders who eventually finance the CSR efforts of a business. In so far as volatility in stock returns is undesirable, our results suggest that the use of CSR practices such as marketing causes and green initiatives could be a smart approach to hospitality firms. Companies who fund marketing linked to cause tend to be socially accountable. The positive image of a product contributes to an increased market value that in effect affects the company's risk reduction positively. Nevertheless, businesses in the hospitality sector, which plan to use CSR for risk management, must understand it is not a "one shoe fits all" trend to choose CSR programs. When activity is very consistent with the image of the company and its products, the CSR effect on consumers is increased. Smart CSR practices can also shield an organization from fluctuations in cash flow, while increasing its shareholder value (in the form of focused contributions, community support, environmental projects and organizational responsibility).



CSR, corporate social responsibility, equity risk, tourism, hotel, airline, restaurant, casino