Corporate social responsibility and Eurozone corporate bonds: The moderating role of country sustainability

Stellner, Christoph; Klein, Christian; Zwergel, Bernhard

doi:10.1016/j.jbankfin.2015.04.032

Cited by 248 publications

(206 citation statements)

References 68 publications

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“…Overall our results are consistent with the risk mitigation view, also supported by Stellner et al (2015) and, to a lesser extent, Hoepner et al (2016). Conversely, findings of Menz (2010) and Magnanelli and Izzo (2017) show that companies with better CSP face, respectively, higher spreads for their corporate bonds and higher cost of debt.…”

supporting

confidence: 90%

Do corporate social responsibility ratings affect credit default swap spreads?

Drago

Carnevale

Gallo

2018

Corp Soc Responsibility Env

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We examine the impact of a corporate social responsibility (CSR) rating announcement on the credit default swap (CDS) spreads of European firms. Our results indicate that a CSR rating upgrade leads to an immediate and significant decrease in CDS spreads of rated firms. In contrast, CSR rating downgrades do not have a significant immediate impact on the CDS market. Additionally, better CSR ratings, in terms of both the overall score and the scores for the three main CSR pillars (economic, environmental, and social), lead to lower CDS spreads. Therefore, we document that the CSR rating is a measure of CSR performance that affects market CDS prices. Our findings are consistent with the risk mitigation view, highlighting the benefits derived from CSR commitment. Consequently, CSR engagement can function as a tool for improving firm's creditworthiness. This result may provide an incentive to pay more attention to CSR in managerial, regulatory, and investment decisions.

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supporting

confidence: 90%

Do corporate social responsibility ratings affect credit default swap spreads?

Drago

Carnevale

Gallo

2018

Corp Soc Responsibility Env

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“…In line with Menz (2010), Goss and Roberts (2011) show that banks' lenders do not reward the implementation of CSR-ESG matters within the interest rate spread of loans; additionally, "firms with social responsibility concerns pay between 7 and 18 basis points more than companies which prefer no involvement in this practice" (Goss & Roberts, 2011). Finally, the research of Stellner, Klein, and Zwergel (2015) contributes to the literature by providing a scale position on these opposite results. Precisely, the authors aim at demonstrating whether higher corporate social performance (CSP) has impacted on credit risk measured through credit rating and zero-volatility spreads.…”

Section: Esg and Debt Financingmentioning

confidence: 76%

The Linkage between ESG Performance and Credit Ratings: A Firm-Level Perspective Analysis

Devalle¹,

Fiandrino²,

Cantino³

2017

IJBM

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This paper investigates the effect of environmental, social, and governance (ESG) performance on credit ratings. We argue that ESG factors should be considered in the credit analysis and the creditworthiness evaluation of borrowers because they affect borrowers' cash flows and the likelihood of default on their debt obligations. Consequently, we develop our research by firstly reviewing the literature regarding ESG commitments within financial decision-making processes and then addressing the relation between ESG performance and the cost of debt financing. We reveal no unanimous results and no clear-cut boundaries on this matter yet. Secondly, to disentangle this relationship, which is not well defined by scholars, we empirically investigate the nexus between ESG performance and credit rating issues on a sample of 56 Italian and Spanish public firms for which ESG performance in 2015 was achieved. Our final sample includes 15 variables for 56 observations: 840 items are under analysis. Our findings suggest that ESG performance, especially concerning social and governance metrics, meaningfully affects credit ratings. We do not sort out significant results referring to environmental scores, so further research is needed to investigate this ever-growing matter and strengthen this considerable nexus.

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“…Following the argumentation of Stellner et al. (), the creation of intangibles, internal resources, and moral capital finally results in a more stable financial performance, a higher level of profitability, and thus a more favorable risk profile. A higher (lower) level of CSR reduces (increases) financial and operating risk (McGuire, Sundgren, & Schneeweis, ), and risk in the areas of social issues (El Ghoul, Guedhami, Kwok, & Mishra, ; Feldmann, Soyka, & Ameer, ; Sharfman & Fernando, ).…”

Section: Csr and Distribution Of Stock Returnsmentioning

confidence: 95%

“…In contrast to this over‐investment view, recent literature (Stellner, Klein, & Zwergel, ) reports upon a risk mitigation effect of CSR on credit risk. As a measure for this risk mitigating effect, we analyze the influence of CSR on crash risk.…”

Section: Introductionmentioning

confidence: 96%

Over‐investment or risk mitigation? Corporate social responsibility in Asia‐Pacific, Europe, Japan, and the United States

Utz

2018

Rev Financ Econ

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We study the relationship of corporate social responsibility (CSR) and the distribution of stock returns for an international sample. Firms with a high level of CSR generally exhibit superior stock price synchronicity in the markets of Europe, Japan, and the United States. In particular, we identify optimal levels of CSR to minimize idiosyncratic risk for each region. Moreover, CSR has a mitigating effect on crash risk in Europe and the United States. In contrast, firms from the Asia‐Pacific region display CSR over‐investment followed by a higher crash risk. This appears to be a consequence of globalization, which forces firms from Asia‐Pacific to overinvest in CSR to adapt western standards.

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Corporate social responsibility and Eurozone corporate bonds: The moderating role of country sustainability

Cited by 248 publications

References 68 publications

Do corporate social responsibility ratings affect credit default swap spreads?

Do corporate social responsibility ratings affect credit default swap spreads?

The Linkage between ESG Performance and Credit Ratings: A Firm-Level Perspective Analysis

Over‐investment or risk mitigation? Corporate social responsibility in Asia‐Pacific, Europe, Japan, and the United States

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