Financial effects of corporate social responsibility: a literature review

Michael Schröder

Journal of Sustainable Finance & Investment, 2014, vol. 4, issue 4, 337-350

Abstract: This literature overview focuses on the latest results of academic research on the performance of socially responsible investments and the links between corporate social responsibility (CSR) and financing costs of companies. It covers not only the results for stocks (which are in the focus of research so far) but also the effects of CSR on bonds, loans, and default risk as well as "green" real estate.The combined results on these different asset classes and financing instruments lead to a comprehensive up-to-date picture on the relationships between CSR activities of companies and their financing costs. It is shown that the costs for equity and debt capital are linked to CSR ratings with the consequence that companies with "good" CSR ratings exhibit on average lower financing costs. Thus, an (un-)ethical behavior of companies as defined by CSR ratings seems to be significantly related to the costs companies are facing.

Date: 2014
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Citations: View citations in EconPapers (7)

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DOI: 10.1080/20430795.2014.971096

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