Pandej ChintrakarnPornsit JirapornSirimon TreepongkarunaSasin School of Management, BangkokPenn State Great ValleyThe University of Western AustraliaMahidol University2022-08-042022-08-042021-01-01International Review of Economics and Finance. Vol.71, (2021), 143-160105905602-s2.0-85091059163https://repository.li.mahidol.ac.th/handle/20.500.14594/76884We explore the effect of board independence on CSR investments during a stressful time, i.e. during the Great Recession. Our results show that independent directors exhibit an unfavorable view of CSR investments during the crisis. Stronger board independence leads to a significant reduction in CSR. In particular, a rise in board independence by one standard deviation reduces CSR investments by about 8.22%. Further analysis shows that managers raised CSR investments during the crisis, consistent with the risk-mitigation view, where managers invest in CSR to reduce their risk exposure. However, managers appear to over-invest in CSR during the crisis as they are forced to cut back in the presence of a strong board, implying that part of the CSR investments during the crisis is motivated by managers’ own risk preference. Additional robustness checks corroborate the results, including fixed- and random-effects regressions, propensity score matching, and instrumental-variable analysis. Our study is the first to shed light on how independent directors view CSR during a stressful time. Finally, we show that CSR reduces firm risk substantially during the crisis, strongly confirming the risk-mitigation hypothesis.Mahidol UniversityEconomics, Econometrics and FinanceArticleSCOPUS10.1016/j.iref.2020.08.007