Download This PaperThe Relationship Between Credit Rating and Corporate Social Responsibility
28 Pages Posted: 20 May 2020
Date Written: April 23, 2020
Abstract
This article studies the relationship between the CSR rating and credit rating, some other financial information that affects credit rating is also included in the model (tangibility, profitability, liquidity, firm size and debt ration). The result indicates that there is a positive relationship between CSR rating and credit rating, which demonstrates that if a company participate more in corporate social responsibility related activities and thus get a higher CSR score, credit rating agency is more like to give a higher result when assessing the creditworthiness of that company. This study also tries to find out the relationship between CSR strength/CSR weakness and credit rating, and the result indicates that the estimated coefficient for CSR strength is positive, however, it is negative when comes to CSR weakness. The relationship between credit rating and each individual component of CSR rating (community, diversity, employee relations, the environment, human right and product) is also presented. In order to eliminate endogeneity, industry fixed effect, time fixed effect and lead-lag relationship is incorporated in the analysis.
Keywords: Corporate social responsibility (CSR), Credit rating, individual component of CSR
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