Relaxed Financial Constraints and Corporate Social Responsibility

Najah Attig ()
Additional contact information
Najah Attig: Dalhousie University

Journal of Business Ethics, 2024, vol. 189, issue 1, No 7, 131 pages

Abstract: Abstract This study fills an important gap in the literature by providing causal evidence of the impact of relaxing financial constraints on corporate social responsibility (CSR). To isolate this causal link, we examine the enactment of anti-recharacterization laws in some U.S. states, an exogenous shock that has strengthened creditor rights and eased financial constraints of the treated firms. Our difference-in-difference analysis suggests that relaxing financial constraints leads to higher CSR. This evidence is more pronounced in financially constrained firms, firms with more analyst dispersion and increased volatility of cash flows. We also find that the most impacted firms are those with increased post-shock debt financing. In sum, our evidence suggests that easing access to external finance drives corporate goodness, in particular in firms that value external financing.

Keywords: Financial constraints; SR; Creditor rights; Debt capacity (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s10551-023-05353-9 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jbuset:v:189:y:2024:i:1:d:10.1007_s10551-023-05353-9

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10551/PS2

DOI: 10.1007/s10551-023-05353-9

Access Statistics for this article

Journal of Business Ethics is currently edited by Michelle Greenwood and R. Edward Freeman

More articles in Journal of Business Ethics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().