Bondholders’ returns and stakeholder interests: When are they aligned?

42 Pages Posted: 31 Mar 2017 Last revised: 26 Oct 2020

See all articles by Maretno A. Harjoto

Maretno A. Harjoto

Pepperdine University - Pepperdine Graziadio Business School (PGBS)

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin; European Commission's Platform on Sustainable Finance

Marcus Nilsson

Sociovestix Labs - a DFKI spin-off

Date Written: July 23, 2020

Abstract

Using Barney’s (2018) stakeholder perspective of resource-based theory (SRBT), we argue
that bondholders represent the ultimate fixed claimants who value corporate social
responsibility (CSR) in relation to the firms’ risk. Bondholders’ returns and the stakeholders’
interests are aligned when firms have concerns or controversies (risk) but they are not aligned
for firms’ CSR strengths (investments) because it represents higher asset substitution risk.
The alignment and misalignment of bondholders and stakeholders’ interests are weaker for
bonds with longer maturities but greater after a negative shock in credit markets. Analysing a
sample of 5,240 bonds in a portfolio setting from 425 U.S. companies during 2001 to 2014,
we find evidence to support our hypotheses. We demonstrate that the bondholders’ and
stakeholders’ interests are aligned under above conditions.

Keywords: Bond portfolio returns; fixed claimants; stakeholder; CSR concerns and controversies; CSR strengths.

JEL Classification: G11, G12, G23, M14

Suggested Citation

Harjoto, Maretno Agus and Hoepner, Andreas G. F. and Nilsson, Marcus, Bondholders’ returns and stakeholder interests: When are they aligned? (July 23, 2020). Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 20-13, Available at SSRN: https://ssrn.com/abstract=2943583 or http://dx.doi.org/10.2139/ssrn.2943583

Maretno Agus Harjoto (Contact Author)

Pepperdine University - Pepperdine Graziadio Business School (PGBS) ( email )

Drescher Campus Suite 344
24255 Pacific Coast Highway
Malibu, CA 90263
United States
(310) 506-8542 (Phone)
(310) 506-4126 (Fax)

HOME PAGE: http://scholar.google.com/citations?hl=en&user=9-PfQi0AAAAJ

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin ( email )

Blackrock, Co. Dublin
Ireland

European Commission's Platform on Sustainable Finance ( email )

2 Rue de Spa
Brussels, 1000
Belgium

Marcus Nilsson

Sociovestix Labs - a DFKI spin-off ( email )

c/o German Research Center for
Artificial Intelligence (DFKI)
Kaiserslautern, 67663
Germany
07525813580 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
496
Abstract Views
2,233
rank
69,519
PlumX Metrics