Corporate Social Responsibility and Access to Finance
Strategic Management Journal, 35 (1): 1-23.
43 Pages Posted: 25 May 2011 Last revised: 28 Nov 2014
Date Written: May 19, 2011
Abstract
In this paper, we investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to a) reduced agency costs due to enhanced stakeholder engagement and b) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. Moreover, we provide evidence that both of the hypothesized mechanisms, better stakeholder engagement and transparency around CSR performance, are important in reducing capital constraints. The results are further confirmed using several alternative measures of capital constraints, a paired analysis based on a ratings shock to CSR performance, an instrumental variables and also a simultaneous equations approach. Finally, we show that the relation is driven by both the social and the environmental dimension of CSR.
Keywords: corporate social responsibility, sustainability, capital constraints, ESG (environmental, social, governance) performance
JEL Classification: M00, M1, M14, M41, D82, D83, D84
Suggested Citation: Suggested Citation
Register to save articles to
your library
Paper statistics
Recommended Papers
-
Is Earnings Quality Associated with Corporate Social Responsibility?
By Yongtae Kim, Myung Seok Park, ...
-
Corporate Social Responsibility - an Economic and Financial Framework
-
By Ioannis Ioannou and George Serafeim
-
The Consequences of Mandatory Corporate Sustainability Reporting
By Ioannis Ioannou and George Serafeim
-
Does Corporate Social Responsibility Affect The Performance of Firms?
By Sergio Vergalli and Laura Poddi
-
The Impact of Corporate Sustainability on Organizational Processes and Performance
By Robert G. Eccles, Ioannis Ioannou, ...
-
Does Corporate Social Responsibility Affect the Cost of Capital?
By Sadok El Ghoul, Omrane Guedhami, ...
-
Corporate Social Responsibility as a Conflict between Shareholders
By Amir Rubin and Amir Barnea
-
By Marcus Salewski and Henning Zülch