Do Lenders Value Corporate Social Responsibility? Evidence from China

Journal of Business Ethics 104 (2):197-206 (2011)
Abstract
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
Categories (categorize this paper)
DOI 10.1007/s10551-011-0898-6
Options
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history
Request removal from index
Download options
Our Archive


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 25,751
Through your library
References found in this work BETA
Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility.Michael L. Barnett - 2005 - Proceedings of the International Association for Business and Society 16:287-292.

View all 7 references / Add more references

Citations of this work BETA
Do Suppliers Applaud Corporate Social Performance?Min Zhang, Lijun Ma, Jun Su & Wen Zhang - 2014 - Journal of Business Ethics 121 (4):543-557.

View all 12 citations / Add more citations

Similar books and articles

Monthly downloads

Added to index

2011-11-03

Total downloads

16 ( #287,686 of 2,146,803 )

Recent downloads (6 months)

2 ( #279,407 of 2,146,803 )

How can I increase my downloads?

My notes
Sign in to use this feature


Discussion
Order:
There  are no threads in this forum
Nothing in this forum yet.

Other forums