Corporate Social Responsibility and Credit Spreads: An Empirical Study in Chinese Context

Using samples composed of bond-issuing firms publicly traded on Shanghai Stock Exchange, this article examines the relationship between corporate social responsibility and credit spreads and makes the following findings: first, corporate social responsibility can significantly reduce credit spreads, and more corporate social responsibility leads to more reduction in credit spreads; all of the five aspects of corporate social responsibility (i.e., environment, employ-ees, consumers, communities and other stakeholders) are significantly negatively correlated with credit spreads. Second, in companies with weak corporate governance, corporate social responsibility can result in more reduction in credit spreads, which suggests that corporate social responsibility performance contains more information when corporate governance is weak. Third, the correlation between corporate social responsibility and credit spreads tends to become weaker as institutional ownership increases. Fourth, corporate social responsibility is positively correlated with firm's market value and negatively correlated with firm's risks.