The Effects of Corporate Social Performance on the Cost of Corporate Debt and Credit Ratings

2014/01/17 by Ioannis Oikonomou, Chris Brooks, Stephen Pavelin · 1 citation
Economics, Econometrics and Finance · Business, Management and Accounting · #Credit Risk and Financial Regulations #Corporate Finance and Governance #Banking stability, regulation, efficiency

paper · doi:10.1111/fire.12025

openalex publication_date 2014/01/17 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01

Abstract

Abstract This study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal data set, suggests that overall, good performance is rewarded and corporate social transgressions are penalized through lower and higher corporate bond yield spreads, respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade.

Citations

• Misery Loves Companies: Rethinking Social Initiatives by Business
• The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis
• The Impact of Corporate Social Performance on Financial Risk and Utility: A Longitudinal Analysis
• Parsimonious Modeling of Yield Curves
• Measurement of Corporate Social Action
• Corporate Social and Financial Performance: A Meta-Analysis
• Theory of the firm: Managerial behavior, agency costs and ownership structure
• Simple formulas for standard errors that cluster by both firm and time
• Corporate Social Performance and Stock Returns: UK Evidence from Disaggregate Measures

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