Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification

59 Pages Posted: 23 Oct 2013  

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Napatsorn Jiraporn

State University of New York at New Paltz

Adisak Boeprasert

National Institute of Development Administration (NIDA)

Kiyoung Chang

University of South Florida Sarasota-Manatee - College of Business

Date Written: October 22, 2013

Abstract

We show that a firm’s CSR policy is significantly influenced by the CSR policies of firms in the same 3-digit zip code, an effect possibly due to investor clienteles, local competition, and/or social interactions. We then exploit the variation in CSR across the zip codes to estimate the effect of CSR on credit ratings under the assumption that zip code assignments are exogenous. We find that more socially responsible firms enjoy more favorable credit ratings. In particular, an increase in CSR by one standard deviation improves the firm’s credit rating by as much as 4.5%.

Keywords: corporate social responsibility, geography, credit ratings, CSR, social responsibility, instrumental variable, endogeneity

JEL Classification: G32, G34

Suggested Citation

Jiraporn, Pornsit and Jiraporn, Napatsorn and Boeprasert, Adisak and Chang, Kiyoung, Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification (October 22, 2013). Available at SSRN: https://ssrn.com/abstract=2343730 or http://dx.doi.org/10.2139/ssrn.2343730

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Napatsorn Jiraporn

State University of New York at New Paltz ( email )

1 Hawk Drive
600 Hawk Drive
New Paltz, NY 12561-2443
United States

Adisak Boeprasert

National Institute of Development Administration (NIDA) ( email )

118 Seri Thai Road
Bangkok, 10240
Thailand

Kiyoung Chang

University of South Florida Sarasota-Manatee - College of Business ( email )

8350 N. Tamiami Trail, SMC-C263
Sarasota, FL 34243-2025
United States
9413594359 (Phone)
9413594367 (Fax)

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