In this paper, we examine the relations between CSP and CFP around and post unexpected earnings announcements. We select the global 500 firms as our sample because these global big firms have more capacities to engage in the CSR activities. Our findings are as follows. First, at the unexpected negative earnings announcements, firms that engage in CSR suffer less stock price decreasing than those not engage in CSR. CSR programs provide a latent insurance value to firms against negative events; the market construes the CSR as a form of firm reputation building or maintenance. Second, because of price premiums, firms that engage in CSR have better operating performance than those not engage in CSR in the first year and in the long run. There is no significant negative effect on corporate financial performance resulting from excessive costs and expenses induced by CSR activities.
