Document Type

Article

Publication Date

12-2021

Abstract

Bondholders are arm's-length lenders with limited insider information. In this paper, we explore whether corporate social responsibility (CSR) activities could work as an information channel for bondholders to better understand the riskiness of bond-issuing firms. We find a significant negative relation between CSR scores and corporate bond yield spread, especially for firms which invest heavily in diversity and community relations, suggesting that CSR firms are less risky. The result is robust to different model specifications and endogeneity issues. In addition, the negative relation between the CSR score and bond yield spread is significant only if a firm has a strong internal governance mechanism.

Publication Title

Sustainability

ISSN

2071-1050

Publisher

MDPI

Volume

13

Issue

23

First Page

1

Last Page

16

DOI

10.3390/su132313123

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