Corporate social responsibility and cost of financing—The importance of the international corporate governance system

Desender, Kurt A.; LópezPuertas‐Lamy, Mónica; Pattitoni, Pierpaolo; Petracci, Barbara

doi:10.1111/corg.12312

Cited by 39 publications

(27 citation statements)

References 148 publications

(274 reference statements)

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“…This could affect the financial uncertainty, leading to a higher risk and thus higher cost of debt financing. Many other authors also suppose that CSR can increase reputation and decrease the firm risks (Desender et al, 2020;Bacha et al, 2021). It seems therefore that corporate reputation, among other factors, might explain the mechanism by which CSR influences cost of debt.…”

Section: Prior Researchmentioning

confidence: 99%

The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation

Maaloul

Zéghal

Ben‐Amar

et al. 2021

Corp Reputation Rev

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Prior studies on the relationship between ESG information and cost of debt have found mixed results. They conclude that this relationship may be affected by some characteristics or attributes of the company. In this study, we examine whether corporate reputation mediates the relationship between ESG information and cost of debt. In other words, this study explores how ESG information influences corporate reputation, and how, in turn, corporate reputation affects the cost of debt financing. Data for corporate reputation were obtained from the Fortune "World's Most Admired Companies" List, whereas data on ESG information were extracted from two sources: ESG performance were obtained from Sustainalytics database and ESG disclosure were obtained from Bloomberg database. Data on cost of debt and other control variables were also collected from Bloomberg database.Using Structural Equation Models (SEM), we report a positive effect of both ESG performance and disclosure on corporate reputation. We also find that a good corporate reputation reduces the cost of debt financing and mediates the relationship between ESG performance/disclosure and cost of debt. We therefore conclude that firms that manage and disclose information on ESG issues have a better reputation, which in turn reduces their debt financing costs.

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Section: Prior Researchmentioning

confidence: 99%

The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation

Maaloul

Zéghal

Ben‐Amar

et al. 2021

Corp Reputation Rev

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show abstract

“…Many studies have examined CSR and cost of debt and debt rating (Bae et al , 2018; Huang et al , 2018; La Rosa et al , 2018; Hamrouni et al , 2019; Desender et al , 2020). The cost of debt has a relationship to debt as a source of financing.…”

Section: Theory Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Corporate social responsibility and debt financing of listed firms: a quantile regression approach

Oware

Mallikarjunappa

2021

JFRA

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Purpose The purpose of the study is to examine the effect of corporate social responsibility (CSR) on debt financing (natural logarithm of debt and leverage ratios) of listed firms. Design/methodology/approach Using content analysis for data extraction, the study examines listed firms on the Bombay Stock Exchange (BSE) from 2010 to 2019 financial year. It uses a quantile regression and panel fixed effect regression as the model's application. Findings The study shows that CSR expenditure has a positive and strong correlation with debt financing (i.e. natural logarithm of long-term and short-term debts). The first findings show that CSR expenditure has a negative and statistically significant association with total leverage ratio, using conditional mean and median percentile. However, there is a positive and statistically significant association between CSR expenditure and long-term leverage ratio at the 25th and 50th percentile. The second findings show that CSR expenditure has a positive and statistically significant association with long-term debt but an insignificant association with short-term debt and total debt under a conditional mean average. The application of quantile regression addresses the values that fall outside the confidence interval and therefore document a positive and statistically significant association between CSR expenditure and debt financing (short-term debt, long-term debt and total debt) at the 25th, 50th and 75th percentile. Originality/value The introduction of quantile regression gives a novelty in CSR and debt financing study, which to the best of the authors’ knowledge, has not received any attention. Similarly, firms have better information on how to position their CSR expenditure to attract providers of debt financing.

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“…In addition, Desender et al . (2020) examine whether international CG systems shape the relationship between CSR and the cost of financing in an international setting. They find that the link between CSR performance and the cost of equity is negative in a shareholder‐oriented system, while this link is positive in a stakeholder‐oriented system.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate governance and carbon performance: role of carbon strategy and awareness of climate risk

Luo

Tang

2020

Accounting & Finance

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This study investigates whether corporate governance (CG) leads to improved corporate social responsibility (CSR) in relation to carbon performance. We draw on multiple theoretical lenses for CSR and use a sample of the top 350 listed UK companies. Our results show that overall CG quality has a discernible influence on carbon performance, based on outcome-based carbon emissions. Our empirical findings and inferences still hold with an action-based performance measure as well. In addition, we find that the relationship between CG and carbon performance is significantly moderated by carbon strategy and managerial awareness of carbon risk. Our evidence supports the claim that reforms of CG in the UK have promoted CSR behaviour in carbon performance, and this insight is not documented elsewhere.

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Corporate social responsibility and cost of financing—The importance of the international corporate governance system

Cited by 39 publications

References 148 publications

The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation

The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation

Corporate social responsibility and debt financing of listed firms: a quantile regression approach

Corporate governance and carbon performance: role of carbon strategy and awareness of climate risk

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