The Effects of Corporate Social Performance on the Cost of Corporate Debt and Credit Ratings
38 Pages Posted: 14 Oct 2011
Date Written: October 14, 2011
Abstract
This study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal dataset, suggests that overall, good performance is rewarded and corporate social transgressions are penalised through lower and higher corporate bond yield spreads respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade. Additional investigation shows that these relationships are more pronounced for bonds with higher maturities and those issues assigned with either high or very low ratings.
Keywords: Corporate Social Responsibility, CSR, CSP, Credit Ratings, Cost of Debt, Credit Spreads, Corporate Bonds
JEL Classification: C33, G32, M14
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
International Evidence on Ethical Mutual Fund Performance and Investment Style
By Rogér Otten, Rob Bauer, ...
-
International Evidence on Ethical Mutual Fund Performance and Investment Style
By Rob Bauer, Kees C. G. Koedijk, ...
-
Investing in Socially Responsible Mutual Funds
By Christopher Geczy, Robert F. Stambaugh, ...
-
The Eco-Efficiency Premium Puzzle
By Jeroen Derwall, Rob Bauer, ...
-
Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices
By Alex Edmans
-
Corporate Social Performance and Stock Returns: UK Evidence from Disaggregate Measures
By Stephen J. Brammer, Chris Brooks, ...