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Corporate social responsibility and credit risk

Author

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  • Bannier, Christina E.
  • Bofinger, Yannik
  • Rock, Björn

Abstract

We study the relationship between corporate social responsibility and credit risk for U.S. and European firms over the period 2003 to 2018. Differentiating between the various facets of corporate social responsibility shows that only environmental aspects are negatively related with various measures of credit risk for U.S. firms. For European firms, both environmental and social aspects are negatively associated with credit risk. Surprisingly, we find that credit ratings do not reflect the same contemporaneous relationship with corporate social responsibility. Our results are robust against different estimation methods.

Suggested Citation

  • Bannier, Christina E. & Bofinger, Yannik & Rock, Björn, 2022. "Corporate social responsibility and credit risk," Finance Research Letters, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001331
    DOI: 10.1016/j.frl.2021.102052
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    Cited by:

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    2. Qian, Qian & Chao, Xiangrui & Feng, Hairong, 2023. "Internal or external control? How to respond to credit risk contagion in complex enterprises network," International Review of Financial Analysis, Elsevier, vol. 87(C).
    3. Xia Wu & Danlu Bu & Jun Lian & Yanping Bao, 2022. "Green Bond Issuance and Peer Firms’ Green Innovation," Sustainability, MDPI, vol. 14(24), pages 1-24, December.
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    5. Davide Lauria & W. Brent Lindquist & Stefan Mittnik & Svetlozar T. Rachev, 2022. "ESG-Valued Portfolio Optimization and Dynamic Asset Pricing," Papers 2206.02854, arXiv.org.

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    More about this item

    Keywords

    Corporate social responsibility; ESG; Sustainability; Credit risk; Credit rating;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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