Corporate social responsibility and access to finance
By: Beiting Cheng, Ioannis Ioannou, George Serafeim
Contributors: Ioannou, Ioannis; Serafeim, George; Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 11-130; Working paper (Harvard Business School) -- 11-130.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 56
Description: In this paper, 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 a) reduced agency costs due to enhanced stakeholder engagement and b) 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. Moreover, we provide evidence that both of the hypothesized mechanisms, better stakeholder engagement and transparency around CSR performance, are important in reducing capital constraints. The results are further confirmed using an instrumental variables and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and the environmental dimension of CSR.
Notes: "June 2011, revised May 2012" -- Publisher's website.

Includes bibliographical references.