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Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification

Financial management, 2014-09, Vol.43 (3), p.505-531 [Peer Reviewed Journal]

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Title:
Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification
Author: Jiraporn, Pornsit ; Jiraporn, Napatsorn ; Boeprasert, Adisak ; Chang, Kiyoung
Subjects: Advertising expenditures ; Business structures ; Competition ; Corporate social responsibility ; Credit ratings ; Estimation ; Financial leverage ; Geodetic position ; Identification ; Instrumental variables ; Investors ; Postal codes ; Principal place of business ; Social aspects ; Social interaction ; Social responsibility ; Standard deviation ; Studies ; ZIP codes
Is Part Of: Financial management, 2014-09, Vol.43 (3), p.505-531
Description: We show that a firm's CSR policy is significantly influenced by the CSR policies of firms in the same three-digit zip code, an effect possibly due to investor clienteles, local competition, and/or social interactions. We then exploit the variation in CSR across the zip codes to estimate the effect of CSR on credit ratings under the assumption that zip code assignments are exogenous. We find that more socially responsible firms enjoy more favorable credit ratings. In particular, an increase in CSR by one standard deviation improves the firm's credit rating by as much as 4.5%.
Publisher: Tampa: Blackwell Publishing Ltd
Language: English
Identifier: ISSN: 0046-3892
EISSN: 1755-053X
DOI: 10.1111/fima.12044
Source: Alma/SFX Local Collection

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