This paper investigates whether regional negative public sentiment associated with extreme non-financial social shocks (e.g., violence or crime) will affect the resident firms’ M&A announcement return. Using a sample of 3,200 M&A deals in China, our empirical results consistently show that M&A announcement return is significantly lower after the firm’s headquarter city has experienced negative social shocks. We further find that better CSR performance helps to mitigate the impact of these negative shocks. Overall, we show that firm operations will be largely affected by the resident environment and location, and better CSR performance acts as an effective risk management strategy.

This study investigates the influence of mobile payment application use on crime rates. Using a unique database of verdicts from criminal courts in China and an index measuring the extent of mobile payment usage, we find that a one standard deviation increase in mobile payment adoption and usage leads to an 11% decrease in the theft rate. Furthermore, the effect of widespread mobile payment adoption on theft rates is more pronounced in areas characterized by a higher prevalence of cash transactions. These findings suggest that the decrease in cash circulation in society due to mobile payment use can reduce incentives for theft. However, we do not find evidence linking mobile payment usage to other types of criminal activity, including robbery, arson, brawling, homicide, and serious injury by vehicle.

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