Corporate social responsibility and bankruptcy probability: Exploring the role of market competition, intellectual capital, and equity cost

This research investigates the relationship between corporate social responsibility and the probability of bankruptcy and explains the moderating role of the structure of market competition, intellectual capital, and equity cost on this relationship. Using a sample of the Tehran Stock Exchange during 2009-2016, panel data, and logit-ranking model, we find an inverse relationship between corporate social responsibility and the probability of bankruptcy. Results from additional analyses show that corporate social responsibility has a significant inverse relationship with the probability of bankruptcy and when the market structure moves to a monopoly, the probability of bankruptcy is reduced due to high market entry costs for other companies. Overall, we document that corporate social responsibility plays an important roles in reducing the probability of bankruptcy of companies.