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Corporate Social Responsibility and Credit Ratings: On the Moderating Role of Firm Capability

Author

Listed:
  • Chu-Hsiung Lin
  • Tzu-Chuan Kao
  • Chang-Cheng Changchien
  • Chien-Hui Wu

Abstract

This study reexamines the effects of corporate social responsibility (CSR) on credit ratings. On examining a sample of listed firms in Taiwan from 2013 to 2015, we find that our results do not support that CSR activities can enjoy more favorable credit ratings. However, firm capabilities can improve credit ratings, and the relationship between CSR and credit ratings is significant for firms with high capability. Our results indicate that CSR activities are beneficial to credit ratings only for firms with high capabilities.

Suggested Citation

  • Chu-Hsiung Lin & Tzu-Chuan Kao & Chang-Cheng Changchien & Chien-Hui Wu, 2021. "Corporate Social Responsibility and Credit Ratings: On the Moderating Role of Firm Capability," Bulletin of Applied Economics, Risk Market Journals, vol. 8(2), pages 17-24.
    • Handle: RePEc:rmk:rmkbae:v:8:y:2021:i:2:p:17-24
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    References listed on IDEAS

    as
    1. Pornsit Jiraporn & Napatsorn Jiraporn & Adisak Boeprasert & Kiyoung Chang, 2014. "Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification," Financial Management, Financial Management Association International, vol. 43(3), pages 505-531, September.
    2. Feng-Jui Hsu & I-Chien Liu, 2017. "Quantitative easing and default probability of corporate social responsibility in US," Applied Economics Letters, Taylor & Francis Journals, vol. 24(10), pages 681-685, June.
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    5. Kim, Yongtae & Li, Haidan & Li, Siqi, 2014. "Corporate social responsibility and stock price crash risk," Journal of Banking & Finance, Elsevier, vol. 43(C), pages 1-13.
    6. Najah Attig & Sadok El Ghoul & Omrane Guedhami & Jungwon Suh, 2013. "Corporate Social Responsibility and Credit Ratings," Journal of Business Ethics, Springer, vol. 117(4), pages 679-694, November.
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    8. Mohamad Hassan Shahrour & Isabelle Girerd-Potin & Ollivier Taramasco, 2021. "Corporate social responsibility and firm default risk in the Eurozone: a market-based approach," Post-Print hal-03198467, HAL.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate Social Responsibility; Credit Ratings; Firm Capability; Corporate Financial Performance.;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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