Stabilizing Through Responsibility: The Volatility‐Reducing Role of Corporate Social Responsibility in Africa's Emerging Market Firms

What the paper says

ABSTRACT Corporate social responsibility (CSR) has gained prominence as a tool for promoting ethical governance, yet its role in stabilizing firm performance, particularly in volatile emerging markets, remains underexplored. This study investigates whether CSR disclosure reduces corporate performance volatility among listed firms in African emerging economies. Drawing on stakeholder, legitimacy, and risk management theories, the study argues that CSR functions not only as a reputational asset but as a strategic buffer against operational and market shocks. Using a balanced panel of 4284 firm‐year observations from 2011 to 2024, the study constructs two volatility measures: a three‐year rolling window of return on assets and stock return variability. Employing high dimensional fixed effects (HDFE) and system generalized method of moments (GMM) to address endogeneity, the findings reveal that CSR disclosure significantly lowers both profitability and market‐based volatility, even after accounting for firm, industry, and country heterogeneity. The results persist across dynamic specifications, suggesting a structurally embedded role for CSR in enhancing organizational resilience. Theoretically, the study advances CSR literature by shifting focus from profitability to volatility outcomes, offering a novel risk‐based rationale for CSR engagement. Policy‐wise, the findings support aligning CSR disclosure mandates with the Sustainable Development Goals (SDG 8, 9, and 16) to foster economic stability and institutional trust. For managers, the evidence highlights the importance of embedding CSR into risk governance frameworks, not merely for reputation, but as a credible strategy for reducing earnings and market volatility.