Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence

Hong Zhao, Wei Du, Hao Shen and Xinting Zhen
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Hong Zhao: School of Management, Xi’an Jiao Tong University, Xi’an 710049, China
Wei Du: College of Business & Public Management, West Chester University, 700 South High Street, West Chester, PA 19383, USA
Hao Shen: Stuart School of Business, Illinois Institute of Technology, 565 W Adams Street, Chicago, IL 60661, USA
Xinting Zhen: Department of Business Administration and Accounting, Saint Michael’s College, One Winooski Park, Colchester, VT 05439, USA

Sustainability, 2021, vol. 13, issue 23, 1-16

Abstract: Bondholders are arm’s-length lenders with limited insider information. In this paper, we explore whether corporate social responsibility (CSR) activities could work as an information channel for bondholders to better understand the riskiness of bond-issuing firms. We find a significant negative relation between CSR scores and corporate bond yield spread, especially for firms which invest heavily in diversity and community relations, suggesting that CSR firms are less risky. The result is robust to different model specifications and endogeneity issues. In addition, the negative relation between the CSR score and bond yield spread is significant only if a firm has a strong internal governance mechanism.

Keywords: corporate social responsibility; bond yield spread; business risk; stakeholder management (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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