Corporate Social Responsibility: Is it Rewarded by the Corporate Bond Market? A Critical Note [Book Review]
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 96 (1):117-134 (2010)
The question of whether corporate social responsibility (CSR) has a positive impact on firm value has been almost exclusively analysed from the perspective of the stock market. We have therefore investigated the relationship between the valuation of Euro corporate bonds and the standards of CSR of mainly European companies for the first time in this article. Generally, the debt market exhibits a considerable weight for corporate finance, for which reason creditors should basically play a significant role in the transmission of CSR into the valuation of financial instruments. Given that socially responsible firms are often regarded as economically more successful and less risky, they should have lower risk premia. The results of the empirical analysis, however, reveal that based on an extensive data panel the risk premium for socially responsible firms – according to the classification by SAM Group – was ceterius paribus higher than for non-socially responsible companies. However, only one case of the models investigated was weakly significant. Thus, largely the relationship has to be classified as marginal; so CSR has apparently not yet been incorporated into the pricing of corporate bonds
|Keywords||corporate social responsibility corporate citizenship sustainability triple bottom line social performance credit spreads corporate bond evaluation|
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References found in this work BETA
Matthew Haigh & James Hazelton (2004). Financial Markets: A Tool for Social Responsibility? [REVIEW] Journal of Business Ethics 52 (1):59-71.
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Mark Sharfman (1996). The Construct Validity of the Kinder, Lydenberg & Domini Social Performance Ratings Data. Journal of Business Ethics 15 (3):287 - 296.
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