Corporate social performance and cost of debt: the relationship

2017 ◽  
Vol 13 (2) ◽  
pp. 250-265 ◽  
Author(s):  
Barbara Sveva Magnanelli ◽  
Maria Federica Izzo
Keyword(s):  
Global Financial Crisis ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Risk Profile ◽  
Cost Of Debt ◽  
Data Set ◽  
Content Type ◽  
Corporate Social ◽  
The Cost ◽  
Practical Implications

Purpose This paper aims to investigate the link between corporate social performance (CSP) and cost of debt financing. Despite academic debate has focused on the link between corporate social responsibility (CSR) and CSP (expressed through accounting and market measures of profitability), few empirical researches have analysed the relations between CSR, cost of debt and its relation with the risk profile of a firm. The literature on the cost of debt determinants generally documents a negative association between measures of the risk of the firm and its cost of debt. The literature on CSR defines risk reduction as one of the potential benefits related to CSR activities. Thus, the expectation is that high CSP scores are inversely related to cost of debt. Design/methodology/approach Using a unique data set of 332 firms over a time period of five years antecedent to the global financial crisis, a linear regression model is applied. Findings The results show a positive relation between CSP and cost of debt, demonstrating that CSR is not a value driver with an impact on the firm’s risk profile. Practical implications The research has also practical implications as it makes managers aware of the potentiality of CSP to reduce the firm’s cost of debt. Originality/value These findings enlarge the empirical research on the value of CSP, expanding it towards a quite new area of investigation: the cost of external financing.

In search of ethics: from Carroll to integrative CSR economics

2019 ◽  
Vol 15 (4) ◽  
pp. 469-491 ◽  
Author(s):  
Sigmund Wagner-Tsukamoto
Keyword(s):  
Institutional Economics ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Business Case ◽  
Future Research ◽  
Market Exchange ◽  
Content Type ◽  
Four Dimensions ◽  
Corporate Social ◽  
Practical Implications

PurposeRevisiting Carroll’s classic corporate social responsibility (CSR) pyramid framework, this paper aims to evolve a novel synthesis of ethics and economics. This yielded an “integrative CSR economics”.Design/methodology/approachThis theory paper examined how to conceptually set up CSR theory, argue its ethical nature and establish its practical, social and empirical relevance. Economic analysis reached out from contemporary institutional economics to Smith’s classic studies.FindingsThe paper reconstructed all of Carroll’s four dimensions of CSR – economic, legal, ethical and philanthropic responsibilities – through economics. The paper discounted a core assumption of much CSR research that economic approach to CSR, including the instrumental, strategic “business case” approach to CSR, were unethical and lacked any foundations in ethics theory. Integrative CSR economics reframes research on viability and capability requirements for CSR practice; redirecting empirical research on links between CSP (corporate social performance) and CFP (corporate financial performance).Research limitations/implicationsThe paper focused on Carroll as the leading champion of CSR research. Future research needs to align other writers with integrative CSR economics. Friedman or Freeman, or the historic contributions of Dodd, Mayo, Bowen or Drucker, are especially interesting.Practical implicationsThe paper set out how integrative CSR economics satisfies the “business case” approach to CSR and develops practical implications along: a systemic dimension of the market economy; a legal-constitutional dimension; and the dimension of market exchanges.Social implicationsIntegrative CSR economics creates ethical benefits for society along: a systemic dimension of the market (mutual gains); a legal-constitutional dimension (law-following); and the dimension of market exchange (ethical capital creation). Social benefits are not only aspired to but also are achievable as a business case approach to CSR is followed.Originality/valueThe paper’s main contribution is a new synthesis of economics and ethics that yields an “integrative CSR economics”.

Bridging the gap between corporate social responsibility performance and tax aggressiveness

2020 ◽  
Vol 33 (4) ◽  
pp. 825-855 ◽  
Author(s):  
Eduardo Ortas ◽  
Isabel Gallego-Álvarez
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Cultural Dimensions ◽  
Economic Sectors ◽  
Data Set ◽  
Content Type ◽  
Tax Aggressiveness ◽  
Corporate Social

PurposeThis paper addresses the role of corporate social responsibility (CSR) performance as a potential mechanism for reducing firms' likelihood of engaging in tax aggressiveness (TAG). The paper also contributes to the existing literature by addressing the moderating effect of national cultures on the link between CSR performance and corporate TAG.Design/methodology/approachThe focus is placed on an unbalanced panel of 2,696 companies distributed in 30 countries and seven economic sectors over the period of 2002–2014.FindingsThe results provide support for those companies achieving high corporate social performance (CSP), corporate environmental performance (CEP) and corporate governance performance (CGP) being less likely to engage in aggressive tax practices. Finally, the results identify some national cultural dimensions moderating the link between disaggregated measures of CSR performance and firms' TAG.Research limitations/implicationsThe difficulty of accessing CSR and TAG data for non-listed companies could bias the data set towards a compliant company profile because of the higher visibility. In addition, the use of effective tax rates to examine firms' TAG should be interpreted with some caution.Practical implicationsThe paper's findings provide unique and useful information for company stakeholders and managers aiming to address the factors that enhance firms' incentives to engage in aggressive tax practices.Originality/valueThis paper addresses the multidimensional nature of CSR performance by analysing the links between CSP, CEP and CGP and corporations' TAG. Furthermore, the research addresses the way in which national culture moderates the links between disaggregated measures of CSR performance and corporate TAG.

Antecedents of corporate social performance: the effects of task environment managerial discretion

2017 ◽  
Vol 13 (2) ◽  
pp. 339-354
Author(s):  
Matthew T. Luth ◽  
Donald J. Schepker
Keyword(s):  
Corporate Social Performance ◽  
Stakeholder Management ◽  
Social Performance ◽  
Managerial Discretion ◽  
Task Environment ◽  
Theoretical Argument ◽  
Data Set ◽  
Content Type ◽  
Corporate Social ◽  
Industry Conditions

Purpose The purpose of this research is to better understand how industry conditions affect corporate social performance (CSP). To accomplish this objective, the authors develop and test a theoretical argument that task environment managerial discretion plays an important role in determining a firm’s level of CSP. Design/methodology/approach In this research, the authors utilize a longitudinal data set of archival data nested across year, firm and industry. They then test their research model using multilevel techniques, which account for the nested nature of their research design. Findings Firms exhibit higher levels of CSP when their industry’s environment is high in dynamism and product differentiation. Conversely, firms exhibit lower levels of CSP when capital intensity is high. Finally, the authors find that firms exhibit higher levels of both positive and negative CSP as industry munificence increases. Research limitations/implications A number of researchers have called for investigation into the antecedents of CSP. This research provides an important next step in understanding the factors that influence firm CSP. Specifically, this research illustrates how the task environment affects stakeholder management by influencing the degree to which firms engage in CSP. Practical implications Managers should be mindful of the task environment’s conditions for managerial discretion and how these conditions affect stakeholder support for CSP. Moreover, managers should understand how industry conditions affect the firm’s ability to achieve competitive advantage through the use of CSP strategies. Originality/value While there has been much research aimed at understanding the potential CSP-firm performance link, there has been relatively little attention paid to understanding what influences firm CSP in the first place. This research suggests that industry-level characteristics of managerial discretion strongly influence firm strategic actions toward social performance.

Towards a more ethical market: the impact of ESG rating on corporate financial performance

2019 ◽  
Vol 15 (1) ◽  
pp. 11-27 ◽  
Author(s):  
Giovanni Landi ◽  
Mauro Sciarelli
Keyword(s):  
Data Analysis ◽  
Corporate Social Performance ◽  
Stock Exchange ◽  
Social Performance ◽  
Panel Data Analysis ◽  
Abnormal Returns ◽  
Socially Responsible ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

Purpose This paper fits in a research field dealing with the impact of Corporate Ethics Assessment on Financial Performance. The authors argue how environmental, social and governance (ESG) paradigm, meant to measure corporate social performance by rating issuance, can impact on abnormal returns of Italian firms listed on Financial Times Stock Exchange Milano Indice di Borsa (FTSE MIB) Index, developing a panel data analysis which runs from 2007 to 2015. Design/methodology/approach This study aims at exploring whether socially responsible investors outperform an excess market return on Italian Stock Exchange because of their investment behavior, testing statistically the relationship between the yearly ESG assessment issued by Standard Ethics Agency on FTSE MIB’s companies and their abnormal returns. To verify the impact of an ESG Rating on a company’s abnormal return, the authors developed a panel data analysis through a Fixed Effects Model. They measured abnormal returns via Fama–French approach, running a yearly Jensen’s Performance Index for each company under investigation. Findings The empirical results denote in Italy both a growing interest to corporate social responsibility (CSR) and sustainability by managers over the past decade, as well as an improving quality in ESG assessments because of a reliable corporate disclosure. Thus, despite investors have been applying ESG criteria in their stock – picking operations, the authors found a not positive and statistically significant impact in terms of market premium, when they have been undertaking a socially responsible investment (SRI). Practical implications The findings described above show that ethics is not yet a reliable fundraising tool for Italian-listed companies, despite SRIs having a positive growth rate over past decade. Investors seem to be not pricing CSR on Stock Exchange Market; therefore, listed companies cannot be rewarded with a premium price because of their highly stakeholder oriented behavior. Originality/value This paper explores, for the first time in Italy, when market extra-returns (if any) are related to corporate social performance and how managers leverage ethics to build capital added value.

The impact of ownership structure on corporate tax avoidance with corporate social responsibility as mediating variable

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anissa Dakhli
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Corporate Tax ◽  
Data Set ◽  
Content Type ◽  
Corporate Social ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the direct and indirect relationship between institutional ownership and corporate tax avoidance using corporate social responsibility (CSR) as a mediating variable. Design/methodology/approach This study uses panel data set of 200 French firms listed during the 2007–2018 period. The direct and indirect effects between managerial ownership and tax avoidance were tested by using structural equation model analysis. Findings The results indicate that institutional ownership negatively affects tax avoidance. The greater the proportion of the institutional ownership, the lower the likelihood of tax avoidance usage. From the result of the Sobel test, this study indicated that CSR partially mediates the effect of institutional ownership on corporate tax avoidance. Practical implications The findings have some policy and practical implications that may help regulators in improving the quality of transactions and in achieving more efficient market supervision. They recommend to the government to add regulations and restrictions to the structure of corporate ownership to control corporate tax avoidance in French companies. Originality/value This study extends the existing literature by examining both the direct and indirect effect of institutional ownership on corporate tax avoidance in French companies by including CSR as a mediating variable.

The 2008–2009 global financial crisis and the cost of debt capital among SMEs: Swedish evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Dynamic Panel Data ◽  
Cost Of Debt ◽  
Cross Sectional ◽  
Content Type ◽  
Debt Capital ◽  
Using Data ◽  
The Cost

PurposeThe main purpose of this study is to describe and analyse the relationship between the 2008–2009 global financial crisis and small and medium-sized enterprises' cost of debt capital.Design/methodology/approachStatistical methods, including multiple OLS and dynamic panel data, were used to analyse a longitudinal cross-sectional panel dataset of 3865 Swedish SMEs operating in five industry sectors over the 2008–2015 period.FindingsThe results suggest that the cost of debt was influenced by the financial crisis and another macroeconomic factor, i.e. the interbank interest rate, and by firm-specific factors such as firm size and lagged cost of debt.Originality/valueTo the authors' best knowledge, this is one of few studies to examine the cost of debt among SMEs during the crisis and post-crisis periods using data from a large-scale, longitudinal, cross-sectional database.

Systemic corporate social responsibility: micro-to-macro transitions, collective outcomes and self-regulation

2016 ◽  
Vol 12 (2) ◽  
pp. 209-227 ◽  
Author(s):  
Brent D. Beal ◽  
Cristina Neesham
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Corporate Social Performance ◽  
Corporate Citizenship ◽  
Social Performance ◽  
Self Regulation ◽  
System Level ◽  
Content Type ◽  
Management Approaches ◽  
Corporate Social

Purpose The purpose of this paper is to call attention to the need to revitalize the systemic nature of corporate social responsibility (CSR) and offer some suggestions about how this might be accomplished. The authors introduce the concept of systemic CSR and associate it with micro-to-macro transitions, the need to make systemic objectives explicit and the responsibility of system participants to regulate their behavior to contribute to these outcomes. Design/methodology/approach The authors comment, from a systemic perspective, on four different management approaches to CSR – shareholder value, corporate social performance, stakeholder theory and corporate citizenship. Three general systemic principles that participants can use as decision-making guides are a focus on value creation, ongoing assessment of collective outcomes and reflective engagement in the aggregation process. Findings The authors observe that businesses routinely demonstrate their ability to think in systemic terms in strategic contexts that require it. If businesses can address systemic issues in these contexts, then they can also apply systemic logic in furtherance of collective (or system-level) objectives. Originality/value The authors propose an approach to CSR that emphasizes micro-to-macro transitions, the need to make systemic objectives explicit and the responsibility of system participants to regulate their behavior to contribute to these desired objectives. Systemic CSR is unique in its explicit focus on the micro-to-macro transition (i.e. the process of aggregation), systemic objectives and the need to actively insource responsibility for contribution to the realization of those objectives.

Stakeholder performance, corporate social performance

2019 ◽  
Vol 14 (3) ◽  
pp. 242-253
Author(s):  
Jean Biwole Fouda ◽  
Irène Abessolo Abessolo
Keyword(s):  
Life Cycle ◽  
Corporate Social Performance ◽  
Social Performance ◽  
The Other ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Dominant Type ◽  
Content Type ◽  
Essentially Contested Concepts ◽  
Corporate Social

Purpose The purpose of this paper is to find out what added value does the stakeholder performance concept bring with respect to that of corporate social performance. To better understand the developments of these concepts, the authors resort to Gallie’s theory (1956) of essentially contested concepts, the life-cycle model of Hirsch and Levin’s (1999) umbrella concepts. Reconciling these two theoretical frameworks allows us to introduce the competing category notion consisting of a dominant and a dominated-type concepts. Through a historical and synchronic literature examination, CSP is shown to have characteristics of the dominant type, thanks to its more diffuse character. On the other hand, the stakeholder performance would relate to the dominated type, though it provides better operationalization possibilities. Design/methodology/approach To better understand the developments of these concepts, Gallie’s theory (1956) of essentially contested concepts, the life cycle model of Hirsch and Levin’s (1999) umbrella concepts are used. Findings CSP has characteristics of the dominant type, thanks to its more diffuse character. On the other hand, the stakeholder performance relates to the dominated type, though it provides better operationalization. Originality/value CSP as a dominant type and stakeholder performance is a dominated type.

The relationship between poor CSR performance and hard, negative CSR information disclosures

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maher Jeriji ◽  
Waël Louhichi
Keyword(s):  
Information Disclosure ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Panel Data Analysis ◽  
Content Type ◽  
Csr Reporting ◽  
Opportunistic Behaviour ◽  
Corporate Social ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between hard, negative corporate social responsibility (CSR) information disclosure and corporate social performance. Design/methodology/approach This study uses a generalised least squares panel data analysis based on a sample of firms ranked in the Fortune Global 500 for the period 2013–2016. Robustness check tests were conducted to limit endogeneity concerns. Findings The results show that in line with strategic legitimacy theory, agency theory and organisational stigma theory, poor sustainability performers disclose a low quality of hard, negative CSR information. Practical implications This paper provides guidance for stakeholders to identify good and poor CSR performers by better understanding whether corporate CSR reports are more likely to be symbolic or substantive when considering the amount of hard, negative content in their CSR stand-alone reports. Social implications The research highlights the opportunistic behaviour of CSR reporting, which is used more as a legitimation device than as an accountability mechanism. Thi Originality/value Although numerous studies have investigated the association between the level of corporate social disclosure (CSD) and corporate social performance, no research has focussed on hard, negative CSD. Also, an index that captures the disclosure quality rather than the quantity of negative CSR information was constructed.

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