The effect of corporate social responsibility on the risk of airlines: Moderating the effect of firm size

The main purpose of this study is to investigate the moderating effect of organizational size to the association between corporate social responsibility (CSR) and systematic risks of airlines. Extant literature has claimed that CSR is likely to minimize the risk of businesses and organizational size represents the amount of resources within businesses. Stakeholder theory is the theoretical underpinning of CSR, while a resource-based view is the theoretical foundation of organizational size. Given that argument, this research examined the effect of CSR on systematic risks of airlines considering organizational size as a moderator. Systematic risk was derived from the capital asset pricing model (CAPM). Publicly traded airlines listed on the US stock market were examined with the use of various sources including Compustat using the standard industry classification (SIC) code 4512, Beta decile, Kinder, Lydenberg, Domini (KLD), and US Bureau of Economic Analysis (BEA). A total of 19 airlines were examined during the years from 2001–2012. Ordinary least squares (OLS) and feasible generalized least squares (GLS) were the instruments to analyze the data. The results noted that organizational size negatively moderates the association between CSR and systematic risk of airlines.