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Sustainability
Volume 13
Issue 23
10.3390/su132313123
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Article

Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence

by
Hong Zhao
1,*,
Wei Du
2,
Hao Shen
3 and
Xinting Zhen
4
1
School of Management, Xi’an Jiao Tong University, Xi’an 710049, China
2
College of Business & Public Management, West Chester University, 700 South High Street, West Chester, PA 19383, USA
3
Stuart School of Business, Illinois Institute of Technology, 565 W Adams Street, Chicago, IL 60661, USA
4
Department of Business Administration and Accounting, Saint Michael’s College, One Winooski Park, Colchester, VT 05439, USA
*
Author to whom correspondence should be addressed.
Sustainability 2021, 13(23), 13123; https://doi.org/10.3390/su132313123
Submission received: 17 October 2021 / Revised: 15 November 2021 / Accepted: 16 November 2021 / Published: 26 November 2021
(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)
Versions Notes

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.
Keywords: corporate social responsibility; bond yield spread; business risk; stakeholder management corporate social responsibility; bond yield spread; business risk; stakeholder management

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MDPI and ACS Style

Zhao, H.; Du, W.; Shen, H.; Zhen, X. Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence. Sustainability 2021, 13, 13123. https://doi.org/10.3390/su132313123

AMA Style

Zhao H, Du W, Shen H, Zhen X. Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence. Sustainability. 2021; 13(23):13123. https://doi.org/10.3390/su132313123

Chicago/Turabian Style

Zhao, Hong, Wei Du, Hao Shen, and Xinting Zhen. 2021. "Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence" Sustainability 13, no. 23: 13123. https://doi.org/10.3390/su132313123

APA Style

Zhao, H., Du, W., Shen, H., & Zhen, X. (2021). Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence. Sustainability, 13(23), 13123. https://doi.org/10.3390/su132313123

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