Impact of CSR on cost of debt and cost of capital: Australian evidence

Md. Borhan Uddin Bhuiyan and Thi Hong Nhung Nguyen

Social Responsibility Journal, 2019, vol. 16, issue 3, 419-430

Abstract: Purpose - This paper aims to investigate the association between the corporate social responsibility (CSR) and the cost of equity (COE) and cost of debt (COD). Design/methodology/approach - The authors use the multivariate regression analysis approach to address the developed hypotheses. Findings - Using a sample of 230 Australian listed firms from 2004 to 2016, the authors document that firms complying with higher CSR affect both COE and COD negatively, which means that CSR disclosure reduces financing cost. Practical implication - These results support the risk mitigation perspective of CSR compliance, showing that both the investors and creditors may lower their expected returns because they find that CSR can mitigate potential business risk. Originality/value - The authors extend the CSR research with both COE and COD.

Keywords: CSR; Risk; Cost of debt; Cost of equity (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:srjpps:srj-08-2018-0208

DOI: 10.1108/SRJ-08-2018-0208

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