David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 104 (2):197-206 (2011)
Drawing on risk mitigation theory, this article examines whether the improvement of firms’ social performance reduces debt financing costs (CDFs) in China, the world’s largest emerging market. Employing both the ordinary least square (OLS) and the two-stage instrumental variable regression methods, we find that improved corporate social responsibility (CSR) reduces the CDF when firms’ CSR investment is lower than an optimal level; however, this relationship is reversed after the CSR investment exceeds the optimal level. Firms with extremely low or extremely high CSR are subject to a higher CDF. The results also suggest that the optimal CSR level for small firms is higher than that for large firms. This study is the first to document a U-shaped relationship between CSR and CDF and also the first to investigate this relationship within an emerging market context.
|Keywords||China Corporate social responsibility Corporate philanthropy Debt financing cost Risk management Size|
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References found in this work BETA
Michael L. Barnett (2005). Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility. Proceedings of the International Association for Business and Society 16:287-292.
Ran Zhang, Jigao Zhu, Heng Yue & Chunyan Zhu (2010). Corporate Philanthropic Giving, Advertising Intensity, and Industry Competition Level. Journal of Business Ethics 94 (1):39 - 52.
Duygu Turker (2009). How Corporate Social Responsibility Influences Organizational Commitment. Journal of Business Ethics 89 (2):189 - 204.
David H. Saiia, Archie B. Carroll & Ann K. Buchholtz (2003). Philanthropy as Strategy When Corporate Charity “Begins at Home”. Business and Society 42 (2):169-201.
Ran Zhang, Zabihollah Rezaee & Jigao Zhu (2010). Corporate Philanthropic Disaster Response and Ownership Type: Evidence From Chinese Firms' Response to the Sichuan Earthquake. [REVIEW] Journal of Business Ethics 91 (1):51 - 63.
Citations of this work BETA
Xingqiang Du, Wei Jian, Quan Zeng & Yingjie Du (2013). Corporate Environmental Responsibility in Polluting Industries: Does Religion Matter? Journal of Business Ethics 124 (3):1-23.
Mahfuja Malik (2015). Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature. Journal of Business Ethics 127 (2):419-438.
Min Zhang, Lijun Ma, Jun Su & Wen Zhang (2014). Do Suppliers Applaud Corporate Social Performance? Journal of Business Ethics 121 (4):543-557.
Xingqiang Du, Jianying Weng, Quan Zeng, Yingying Chang & Hongmei Pei (forthcoming). Do Lenders Applaud Corporate Environmental Performance? Evidence From Chinese Private-Owned Firms. Journal of Business Ethics.
Wenjing Li & Xiaoyan Lu (forthcoming). Institutional Interest, Ownership Type, and Environmental Capital Expenditures: Evidence From the Most Polluting Chinese Listed Firms. Journal of Business Ethics.
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