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Financial effects of corporate social responsibility: a literature review

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  • Michael Schröder

Abstract

This literature overview focuses on the latest results of academic research on the performance of socially responsible investments and the links between corporate social responsibility (CSR) and financing costs of companies. It covers not only the results for stocks (which are in the focus of research so far) but also the effects of CSR on bonds, loans, and default risk as well as "green" real estate.The combined results on these different asset classes and financing instruments lead to a comprehensive up-to-date picture on the relationships between CSR activities of companies and their financing costs. It is shown that the costs for equity and debt capital are linked to CSR ratings with the consequence that companies with "good" CSR ratings exhibit on average lower financing costs. Thus, an (un-)ethical behavior of companies as defined by CSR ratings seems to be significantly related to the costs companies are facing.

Suggested Citation

  • Michael Schröder, 2014. "Financial effects of corporate social responsibility: a literature review," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(4), pages 337-350, October.
    • Handle: RePEc:taf:jsustf:v:4:y:2014:i:4:p:337-350
    DOI: 10.1080/20430795.2014.971096
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    Cited by:

    1. Ioannis Oikonomou & Chao Yin & Lei Zhao, 2020. "Investment horizon and corporate social performance: the virtuous circle of long-term institutional ownership and responsible firm conduct," The European Journal of Finance, Taylor & Francis Journals, vol. 26(1), pages 14-40, January.
    2. Bert Scholtens & Sophie van’t Klooster, 2019. "Sustainability and bank risk," Palgrave Communications, Palgrave Macmillan, vol. 5(1), pages 1-8, December.
    3. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    4. Patrícia Pereira & Maria Céu Cortez & Florinda Silva, 2019. "Socially responsible investing and the performance of Eurozone corporate bond portfolios," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1407-1422, November.
    5. Carnevale, Concetta & Drago, Danilo, 2024. "Do banks price ESG risks? A critical review of empirical research," Research in International Business and Finance, Elsevier, vol. 69(C).
    6. Paolo Capelli & Federica Ielasi & Angeloantonio Russo, 2021. "Forecasting volatility by integrating financial risk with environmental, social, and governance risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1483-1495, September.
    7. Lestari, Jenjang Sri & Frömmel, Michael, 2024. "Socially responsible investments: doing good while doing well in developed versus emerging markets?," Research in International Business and Finance, Elsevier, vol. 69(C).

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