How does corporate social responsibility have influence on firms' access to trade credit

Yufen Wei, Qigui Liu and Jinbo Luo

Accounting and Finance, 2023, vol. 63, issue S1, 1321-1349

Abstract: This study identifies and examines the channels through which corporate social responsibility (CSR) impacts firms' access to trade credit. Using a sample of Chinese firms, we identify two channels through which CSR impacts firms' access to trade credit: (i) better CSR performance reduces firms' systematic risk; and (ii) better CSR performance enhances trust from suppliers. We also document that the positive effect that CSR has on firms' access to trade credit is more pronounced in firms with limited access to formal financial resources, i.e., in non‐state‐controlled enterprises, especially those without political connections, and in firms located in regions with a lower level of social trust. Our findings are robust to a series of tests that address the endogeneity issue. Overall, we argue that CSR performance enhances firms' access to trade credit through the channels of systematic risk and trust enhancing.

Date: 2023
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