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Corporate social responsibility and access to finance
Author(s) -
Cheng Beiting,
Ioannou Ioannis,
Serafeim George
Publication year - 2014
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2131
Subject(s) - corporate social responsibility , transparency (behavior) , stakeholder engagement , stakeholder , accounting , agency (philosophy) , business , social capital , principal–agent problem , information asymmetry , microeconomics , corporate finance , economics , finance , public relations , corporate governance , management , computer science , political science , law , philosophy , computer security , epistemology
We investigate whether superior performance on corporate social responsibility ( CSR ) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to (1) reduced agency costs due to enhanced stakeholder engagement and (2) reduced informational asymmetry due to increased transparency. Using a large cross‐section of firms, we find that firms with better CSR performance face significantly lower capital constraints. We provide evidence that both better stakeholder engagement and transparency around CSR performance are important in reducing capital constraints. The results are further confirmed using several alternative measures of capital constraints, a paired analysis based on a ratings shock to CSR performance, an instrumental variables approach, and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and environmental dimension of CSR . Copyright © 2013 John Wiley & Sons, Ltd.