How does corporate social responsibility affect the cost of equity capital through operating risk?

Chen, Bo; Zhang, Aojie

doi:10.1016/j.bir.2021.01.005

Cited by 10 publications

(9 citation statements)

References 32 publications

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“…The impact of CSR disclosure on the cost of equity capital is more intricate than just positive or negative (Chen & Zhang, 2021; Ishaq & Hussain, 2018; Yi et al, 2020). Given the ambiguity around the influence of CSR disclosure on equity capital costs, a more comprehensive approach to explaining the likely transmission mechanism between them is essential.…”

Section: Theoretical Framework and Hypothesis Developmentmentioning

confidence: 99%

“…CSR disclosure also has an adverse influence on the possibility of stock price crash (Kim et al, 2014). Therefore, this suggests that CSR disclosure might lower the cost of equity capital by lowering business risk, or at least the market's perception of riskiness (Chen & Zhang, 2021).…”

Section: Csr Disclosure and Coementioning

confidence: 99%

“…This result could be due to some other intervening factors which have been considered in the empirical studies. Unfortunately, while most studies have focused on the nexus between CSR and financing costs in general, very few contributions have analyzed how intervening factors affect this relationship (Chen & Zhang, 2021; Xu et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…The purpose of this study is to investigate if the risk of stock price crash mediates the impact of CSR disclosure on equity capital costs. This was prompted by some empirical evidence about how CSR activities might help reduce finance costs (Chen & Zhang, 2021; Dhaliwal et al, 2014; El Ghoul et al, 2018). This is also driven by the prior idea that corporations can lessen their financing costs by minimizing stock price crash risk through better CSR disclosure (Wu & Hu, 2019).…”

Section: Introductionmentioning

confidence: 99%

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The mediating effect of stock price crash risk on the relationship between corporate social responsibility and cost of equity moderated by state ownership: Moderated‐mediation analysis

Thuy

Khương

Canh

et al. 2022

Corp Soc Responsibility Env

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This paper investigates the roles that stock price crash risk and state ownership play in the relationship between CSR disclosure and cost of equity capital (COE). The research sample comprises 225 listed firms in Vietnam. We use GMM estimation technique and Sobel test to test the empirical hypotheses. To begin with, there is a complementary mediation effect of stock price crash risk in the relationship between CSR disclosure and COE. Notably, our study is the first empirical one to confirm that stock price crash risk serves as an intermediate in the above relationship. Second, state ownership strengthens the negative impact of CSR disclosure on COE significantly. The paper offers insight into how stock price crash risk and state ownership affect the merit of CSR disclosure towards firms' COE and how the lack of consideration of such factors could be the reason for the inconsistent findings in the previous studies.

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Section: Theoretical Framework and Hypothesis Developmentmentioning

confidence: 99%

Section: Csr Disclosure and Coementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The mediating effect of stock price crash risk on the relationship between corporate social responsibility and cost of equity moderated by state ownership: Moderated‐mediation analysis

Thuy

Khương

Canh

et al. 2022

Corp Soc Responsibility Env

View full text Add to dashboard Cite

show abstract

“…Political corruption also affects the cost of equity capital, as firms operating in states with higher levels of corruption have higher costs of equity capital (Hossain and Kryzanowski, 2021). Corporate social responsibility performance has an impact on the cost of equity capital, as corporate social responsibility performance is significantly negatively correlated with the cost of equity capital (Chen and Zhang, 2021). The CAPM model, which Laghi and Marcantonio (2016), extended by premiums for certain idiosyncratic risks, can be used to value the cost of equity capital.…”

Section: Literature Researchmentioning

confidence: 99%

Actual paid cost of equity in construction

Krulický¹,

Machová²,

Burghauserová³

2022

JESI

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The value of the cost of equity capital is very important, both for all businesses and for investors, as it expresses the return on invested funds and is one of the most important factors in decision-making. The aim of the article is to determine the value of the actual paid costs of equity capital in the construction industry in 2016-2019. The used data from the Cribis / Albertina databases were processed using changes in the undistributed economic result of previous years and the economic result of the current accounting period. The results found show that the average cost of equity in the years 2016 -2019 ranges from 29.35 % -37.81 % and the median values range from 16.43 % -24.24 %. The benefit of the presented results is primarily seen in their possibility of subsequent prediction of future costs of equity capital. A limitation of the research may be in the data used, for which it is appropriate when it is the most recent.

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ESG performance, institutional investors’ preference and financing constraints: Empirical evidence from China

Bai

Han

et al. 2022

Borsa Istanbul Review

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How does corporate social responsibility affect the cost of equity capital through operating risk?

Cited by 10 publications

References 32 publications

The mediating effect of stock price crash risk on the relationship between corporate social responsibility and cost of equity moderated by state ownership: Moderated‐mediation analysis

The mediating effect of stock price crash risk on the relationship between corporate social responsibility and cost of equity moderated by state ownership: Moderated‐mediation analysis

Actual paid cost of equity in construction

ESG performance, institutional investors’ preference and financing constraints: Empirical evidence from China

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