The effects of corporate social performance on the cost of corporate debt and credit ratings

Ioannis Oikonomou, Chris Brooks, Stephen Pavelin

Research output: Contribution to journalArticlepeer-review

87 Citations (Scopus)

Abstract

This study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal data set, suggests that overall, good performance is rewarded and corporate social transgressions are penalized through lower and higher corporate bond yield spreads, respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade.
Original languageEnglish
Pages (from-to)49-75
Number of pages27
JournalThe Financial Review
Volume49
Issue number1
Early online date17 Jan 2014
DOIs
Publication statusPublished - 1 Feb 2014

Keywords

  • Sustainability
  • corporate social responsibility
  • CSP
  • socially responsible investing
  • credit ratings
  • credit spreads
  • corporate bonds

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