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  1. Environmental, Social, and Governance (ESG) Outcomes and Municipal Credit Risk.Christopher C. Bruno & Witold J. Henisz - forthcoming - Business and Society.
    We investigate the association between a wide range of community-level environmental, social, and governance (ESG) outcomes and the credit risk of U.S. municipal finance fixed-income securities. We develop a novel dataset of multiple ESG outcomes for U.S. counties and connect it to a 2001-2020 panel of municipal bonds issued within those counties. Overall, we find supportive evidence that collective increases in community-level ESG factors (i.e., ESG outcomes) are associated with reductions in credit risk for U.S. municipal finance instruments over time. (...)
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  • Relaxed Financial Constraints and Corporate Social Responsibility.Najah Attig - 2023 - Journal of Business Ethics 189 (1):111-131.
    This study fills an important gap in the literature by providing causal evidence of the impact of relaxing financial constraints on corporate social responsibility (CSR). To isolate this causal link, we examine the enactment of anti-recharacterization laws in some U.S. states, an exogenous shock that has strengthened creditor rights and eased financial constraints of the treated firms. Our difference-in-difference analysis suggests that relaxing financial constraints leads to higher CSR. This evidence is more pronounced in financially constrained firms, firms with more (...)
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  • The Role of Share Repurchases for Firms’ Social and Environmental Sustainability.Mario Vaupel, David Bendig, Denise Fischer-Kreer & Malte Brettel - 2023 - Journal of Business Ethics 183 (2):401-428.
    This article embarks on ethical trade-offs at the sustainability/finance interface by contrasting shareholders’ interest in short-term financial returns with society’s interest in counteracting ecological and social grievances. Scrutinizing share repurchases, we investigate a firm’s communicated sustainability orientation (i.e., its environmental and social value orientation) as well as its environmental and social sustainability performance. Our results are based on a large-scale panel dataset of 491 U.S. firms observed from 2004 to 2016. The dataset combines share buyback data with sustainability orientation scores (...)
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  • Factors leadind corporations to continue.Marius Gavrila & Radu-Marius Gavrila - 2019 - Dissertation, Walden University
    Accountability for corporate social responsibility (CSR) and its societal challenges is undetermined, and it is unclear whether business or society should carry these responsibilities. Despite severe criticism from some, many organizations continue to invest in and promote CSR. The purpose of this multiple-case study was to increase the understanding of the phenomenon from the perspective of a purposeful sample of participants who contribute to CSR execution and who were representatives of the 10 organizations identified as active promoters. The participant corporations (...)
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  • Do LGBT-Supportive Corporate Policies Improve Credit Ratings? An Instrumental-Variable Analysis.Pandej Chintrakarn, Sirimon Treepongkaruna, Pornsit Jiraporn & Sang Mook Lee - 2020 - Journal of Business Ethics 162 (1):31-45.
    We investigate the effect of Lesbian, Gay, Bisexual, and Transgender -supportive corporate policies on credit ratings. To the extent that LGBT-friendly policies are beneficial to the firm and therefore improve its expected cash flows, credit rating agencies should assign more favorable credit ratings to the firm. To alleviate endogeneity concerns, we exploit the variations in the LGBT populations across the states in the U.S. as our instrument. Our instrumental-variable analysis reveals that firms that adopt LGBT-supportive corporate policies enjoy better credit (...)
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  • Does Corporate Social Responsibility Affect Information Asymmetry?Jinhua Cui, Hoje Jo & Haejung Na - 2018 - Journal of Business Ethics 148 (3):549-572.
    In this study, we examine the empirical association between corporate social responsibility and information asymmetry by investigating their simultaneous and endogenous effects. Employing an extensive U.S. sample, we find an inverse association between CSR engagement and the proxies of information asymmetry after controlling for various firm characteristics. The results hold using 2SLS considering the reverse side of information asymmetry influencing CSR activities. The results also hold after mitigating endogeneity based on the dynamic panel system generalized method of moment. Furthermore, the (...)
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  • Do Firms Adjust Corporate Social Responsibility Engagement After a Focal Change in Credit Ratings?Alexander Witkowski, Nihat Aktas & Nikolaos Karampatsas - 2022 - Business and Society 61 (6):1684-1722.
    This study revisits the relation between corporate performance and corporate social responsibility in the context of a major shift in firms’ credit risk status. Relying on corporate credit rating as a performance indicator, we examine whether firms under the scrutiny of rating agencies trade-off CSR engagement for credit quality improvement. To explore whether firms adjust their CSR engagement after a focal rating change, we focus on the investment–speculative grade threshold because of its importance in accessing the public debt market. We (...)
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  • Managerial Practices and Corporate Social Responsibility.Najah Attig & Sean Cleary - 2015 - Journal of Business Ethics 131 (1):121-136.
    A unique dataset is exploited to provide insight into the impact of management quality practices on corporate social responsibility for a sample of US manufacturing firms. Our results suggest that MQPs are positively and significantly related to a firm’s CSR rating. This confirms that intangible assets affect corporate outcomes. We also show that superior MQPs matter more in explaining the CSR dimensions that are related directly to the firm’s primary stakeholders.
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  • How Have Corporate Codes of Ethics Responded to an Era of Increased Scrutiny?Tim Loughran, Bill McDonald & James R. Otteson - 2023 - Journal of Business Ethics 183 (4):1029-1044.
    Over the past decade, corporate scandals have proliferated. These scandals, along with the emergence of the #MeToo movement and Environmental, Social, and Corporate Governance (ESG) mandates, have increased the scrutiny of corporations’ ethics culture. How have companies responded in terms of the language appearing in their public ethics documents? We compare the Code of Ethics in 2008 versus 2019 for a sample of S&P 500 firms. For the vast majority of firms, their Code of Ethics lengthened, with the average 2019 (...)
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  • Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies.Fabio La Rosa & Francesca Bernini - 2021 - Journal of Business Ethics 176 (3):467-485.
    In A Treatise on Virtues and Rewards, Dragonetti advances a theory of action based on rewards for virtues. The idea of rewards, especially of awards, relies on the hypothesis that intrinsic motivations drive the actions of good or virtuous citizens. We apply this theory to virtuous entrepreneurs who voluntarily adopt ethical principles as promoted by a recent Italian law. These firms receive an ethical rating by the Italian Competition Authority and can access a set of economic and non-economic benefits. We (...)
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  • On the Value of Corporate Social Responsibility Disclosure: An Empirical Investigation of Corporate Bond Issues in China.Guangming Gong, Si Xu & Xun Gong - 2018 - Journal of Business Ethics 150 (1):227-258.
    We provide the first comprehensive and robust evidence on the relationship between CSR disclosure quality and the costs of corporate bonds in China. We find that firms with high CSR disclosure quality are associated with lower costs of corporate bonds. Our findings are robust to endogeneity issues arising from reverse causality, omitted variable bias, and the interdependencies between price and non-price terms. The negative relationship between CSR disclosure quality and the costs of corporate bonds is stronger in weak corporate governance (...)
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  • Corporate Environmental Responsibility and the Cost of Capital: International Evidence.Sadok El Ghoul, Omrane Guedhami, Hakkon Kim & Kwangwoo Park - 2018 - Journal of Business Ethics 149 (2):335-361.
    We examine how corporate environmental responsibility affects the cost of equity capital for manufacturing firms in 30 countries. Using several approaches to estimate firms’ ex ante equity financing costs, we find in regressions that control for firm-level characteristics as well as industry, year, and country effects that the cost of equity capital is lower when firms have higher CER. This finding is robust to addressing endogeneity through instrumental variables, to using alternative specifications and proxies for the cost of equity capital, (...)
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  • Corporate Social Responsibility and Investment Efficiency.Mohammed Benlemlih & Mohammad Bitar - 2018 - Journal of Business Ethics 148 (3):647-671.
    Using a sample of 21,030 US firm-year observations that represents more than 3000 individual firms over the 1998–2012 period, we investigate the relationship between Corporate Social Responsibility (CSR) and investment efficiency. We provide strong and robust evidence that high CSR involvement decreases investment inefficiency and consequently increases investment efficiency. This result is consistent with our expectations that high CSR firms enjoy low information asymmetry and high stakeholder solidarity (stakeholder theory). Moreover, our findings suggest that CSR components that are directly related (...)
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  • External governance pressure and corporate environmental responsibility: Evidence from a quasi‐natural experiment in China.Qiang Liu, Lianchao Yu, Guowan Yan & Yu Guo - 2022 - Business Ethics, the Environment and Responsibility 32 (1):74-93.
    In recent years, the Audit Pilot of Natural Resources Assets (APNRA) pilot program has been implemented by the Chinese government to strengthen the protection of natural resources and the ecological environment. Based on the APNRA pilot program, we use the multi-period differences–in–differences model to investigate the response of corporate environmental responsibility to external governance pressure. We find that firms significantly improve their environmental investment and performance after the implementation of the APNRA pilot program. Sewage charges (including green fees) and ecological (...)
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  • Loan Guarantees, Corporate Social Responsibility Disclosure and Audit Fees: Evidence from China.Fangjun Wang, Luying Xu, Fei Guo & Junrui Zhang - 2020 - Journal of Business Ethics 166 (2):293-309.
    This paper examines the relationship between loan guarantees and audit fees as well as the moderating effect of corporate social responsibility. We find that guaranteeing another entity’s debt significantly increases firms’ own audit fees. However, the disclosure of CSR information attenuates the fee-increasing effects of loan guarantees. A closer examination reveals that the role of CSR is attributable to the information effect rather than the signal effect. Our results are robust to the use of a quasi-natural experiment, a propensity score (...)
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  • The Corporate Social Responsibility Information Environment: Examining the Value of Financial Analysts’ Recommendations.Changhee Lee, Dan Palmon & Ari Yezegel - 2018 - Journal of Business Ethics 150 (1):279-301.
    This study examines the relationship between corporate social responsibility -related information and the value of financial analysts’ stock recommendations. The information environment in which analysts operate in is affected by CSR-related reports that companies voluntarily issue as well as information that becomes available through third-party analysis and rating institutions. We find an inverse relationship between the value of both upgrade and downgrade revisions and the supply of CSR-related information compiled by third-party institutions, suggesting that CSR-related data are associated with a (...)
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  • Can Ivory Towers be Green? The Impact of Organization Size on Organizational Social Performance.Meike Eilert, Kristen Walker & Jenny Dogan - 2017 - Journal of Business Ethics 140 (3):537-549.
    Organizations differ tremendously in the extent to which they engage in socially responsible behavior and the extent to which this behavior is evaluated by stakeholders. This research examines the complex role of organization size as a driver of perceptions of an organization’s socially responsible behavior and its social performance. Using a unique data set of 302 organizations in the higher education industry, we find that the strength of the organization size–organizational social performance relationship is contingent on whether the organization is (...)
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  • How Does Corporate Social Responsibility Engagement Influence Word of Mouth on Twitter? Evidence from the Airline Industry.Tam Thien Vo, Xinning Xiao & Shuk Ying Ho - 2019 - Journal of Business Ethics 157 (2):525-542.
    Our study examines how a company’s engagement in corporate social responsibility influences word of mouth about the company on Twitter, particularly during a service delay. We use the airline industry as the study context. On the popular social medium Twitter, people post tweets about airline services and raise concerns about service delays when flights are delayed, canceled, or diverted. Drawing on the literature on legitimacy and the halo effect, we argue that a company’s CSR engagement enhances its corporate image, which (...)
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  • Corporate Culture and Investment–Cash Flow Sensitivity.Fuxiu Jiang, Kenneth A. Kim, Yunbiao Ma, John R. Nofsinger & Beibei Shi - 2019 - Journal of Business Ethics 154 (2):425-439.
    Can firms overcome credit constraints with a corporate culture of high integrity? We empirically address this question by studying their investment–cash flow sensitivities. We identify firms with a culture of integrity through textual analysis of public documents in a sample of Chinese listed firms and also through corporate culture statements. Our results show that firms with an integrity-focused culture have lower investment–cash flow sensitivity, even after we address endogeneity concerns. However, we also find that for the culture to reduce the (...)
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  • Corporate Social Responsibility and Firm Debt Maturity.Mohammed Benlemlih - 2017 - Journal of Business Ethics 144 (3):491-517.
    In this article, we extend the streams of research on the capital structure of socially responsible firms by investigating the impact of corporate social responsibility on firm debt maturity. Using a large sample of US firms, we provide evidence that high CSR firms significantly reduce their debt maturity. In particular, our results suggest that diversity and community are the dimensions that matter the most in explaining debt maturity. In additional analyses that use a seemingly unrelated regression approach, our results show (...)
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  • Corporate Bond Covenants and Social Responsibility Investment.Guifeng Shi & Jianfei Sun - 2015 - Journal of Business Ethics 131 (2):285-303.
    This paper examines the effect of corporate social responsibility on the number of bond covenants. We find that a high CSR score has a negative association with the number of bond covenants. Moreover, our results are more pronounced for firms with a high bid-ask spread and high agency costs. Our analysis highlights the effect of the good stakeholder relationship on the bond contracts.
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  • Do Banks Value Borrowers' Environmental Record? Evidence from Financial Contracts.I. -Ju Chen, Iftekhar Hasan, Chih-Yung Lin & Tra Ngoc Vy Nguyen - 2020 - Journal of Business Ethics 174 (3):687-713.
    Banks play a unique role in society. They not only maximize profits but also consider the interests of stakeholders. We investigate whether banks consider firms’ pollution records in their lending decisions. The evidence shows that banks offer significantly higher loan spreads, higher total borrowing costs, shorter loan maturities, and greater collateral to firms with higher levels of chemical pollution. The costly effects are stronger for borrowers with greater risk and weaker corporate governance. Further, the results show that banks with higher (...)
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  • Investor-Paid Ratings and Conflicts of Interest.Leo Tang, Marietta Peytcheva & Pei Li - 2020 - Journal of Business Ethics 163 (2):365-378.
    The Securities and Exchange Commission (SEC) sanctioned investor-paid rating agency Egan-Jones for falsely stating that it did not know its clients’ investment positions. The SEC’s action against Egan-Jones raises the broad question whether knowledge of clients’ investment positions creates a conflict of interest for investor-paid ratings. In an experimental setting, we find that investor-paid rating agencies are likely to assign credit ratings that are biased in favor of their clients’ positions, and that this effect is attenuated when the rated company (...)
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  • Reexamining Corporate Social Responsibility and Shareholder Value: The Inverted-U-Shaped Relationship and the Moderation of Marketing Capability.Wenbin Sun, Shanji Yao & Rahul Govind - 2019 - Journal of Business Ethics 160 (4):1001-1017.
    In the literature, CSR’s roles on firm performance are found to be positive, negative, or neutral. This inconclusive pattern suggests there may be a more complicated mechanism at work than the traditional focus on simple linear associations. We propose and test an inverted-U-shaped relationship between CSR and shareholder value, the fundamental measure of firm performance. Further, we incorporate a critical firm attribute, marketing capability, to moderate the nonlinear link between CSR and shareholder value, thereby exploring a previous understudied area involving (...)
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  • Does CEO Risk-Aversion Affect Carbon Emission?Ashrafee Hossain, Samir Saadi & Abu S. Amin - 2022 - Journal of Business Ethics 182 (4):1171-1198.
    Does CEO tolerance to risk affect a firm’s long-run sustainability? Using CEO insider debt holding, we show that CEO’s risk-aversion encourages immoral yet rational decisions of emitting more greenhouse gas thereby adversely affecting the firm’s long-run sustainability. Our result is robust to several endogeneity tests including a quasi-natural experiment. Our finding also suggest that to mitigate potential adverse reactions from stakeholders, carbon emitting firms with risk-averse CEOs tend to spend more on CSR activities. Much of the heterogeneity in our results (...)
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  • Business Groups and Corporate Social Responsibility.Jongmoo Jay Choi, Hoje Jo, Jimi Kim & Moo Sung Kim - 2018 - Journal of Business Ethics 153 (4):931-954.
    There is a growing literature on corporate social responsibility, but few have focused on the implications of business groups for CSR. We examine the antecedents and outcomes of CSR behaviors of group firms in Korea. We find that group affiliation is associated with higher CSR overall and for its major societal and environmental components. However, the ownership disparity between cash flow and control by controlling inside shareholders is associated with lower CSR, consistent with opportunistic rent expropriation theory. We further find (...)
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  • Firm Internationalization and Corporate Social Responsibility.Najah Attig, Narjess Boubakri, Sadok El Ghoul & Omrane Guedhami - 2016 - Journal of Business Ethics 134 (2):171-197.
    Using a large sample of 3,040 U.S. firms and 16,606 firm-year observations over the 1991–2010 period, we find strong evidence that firm internationalization is positively related to the firm’s corporate social responsibility rating. This finding persists when we use alternative estimation methods, samples, and proxies for internationalization and when we address endogeneity concerns. We also provide evidence that the positive relation between internationalization and CSR rating holds for a large sample of firms from 44 countries. Finally, we offer novel evidence (...)
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  • Corporate Legitimacy and Investment–Cash Flow Sensitivity.Najah Attig, Sean W. Cleary, Sadok Ghoul & Omrane Guedhami - 2014 - Journal of Business Ethics 121 (2):297-314.
    This study provides novel evidence of the impact of corporate social responsibility (CSR) on investment sensitivity to cash flows. We posit that CSR affects investment–cash flow sensitivity (ICFS) through information asymmetry and agency costs, commonly viewed as the two channels through which investment responds to the availability of internal cash flows. We find that CSR performance leads to a decrease in ICFS. We further find that ICFS decreases (increases) when CSR strengths (concerns) increase. Finally, we find that the effect of (...)
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