Finance

Psychological resilience

Corporate social responsibility

Pathology

Business

Disease

Coronavirus disease 2019 (COVID-19)

Infectious disease (medical specialty)

Psychotherapist

Biology

Pandemic

Debt

Political science

Capital structure

Psychology

Economics

Ecology

Human capital

Public relations

Monetary economics

Economic capital

Sustainability

Financial system

Market economy

Social capital

Medicine

Accounting and Finance

COVID‐19 has severely constricted global economic activities. This paper examines the joint effect of capital structure and corporate social responsibility (CSR) activities on firm risk during the COVID‐19 pandemic. We find that firms having excessive debt beyond the optimal level experienced high firm risk during the pandemic and the effect is more prevalent among firms with poor CSR performance. In contrast, firms with a debt level below the optimum are self‐protected regardless of their CSR practices. Our study provides businesses with insights on post‐pandemic directions of capital structure and CSR policies to build up sustainability and resilience in a volatile market.

Rethinking capital structure decision and corporate social responsibility in response to COVID‐19