Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification

Pornsit Jiraporn; Napatsorn Jiraporn; Adisak Boeprasert; Kiyoung Chang

doi:10.1111/fima.12044

journal article Sep 01, 2014

Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification

Pornsit Jiraporn

Napatsorn Jiraporn Adisak Boeprasert Kiyoung Chang

Financial Management Vol. 43 No. 3 pp. 505-531 · Wiley

View at Publisher Save 10.1111/fima.12044

Abstract

We show that a firm's CSR policy is significantly influenced by the CSR policies of firms in the same three‐digit zip code, an effect possibly due to investor clienteles, local competition, and/or social interactions. We then exploit the variation in CSR across the zip codes to estimate the effect of CSR on credit ratings under the assumption that zip code assignments are exogenous. We find that more socially responsible firms enjoy more favorable credit ratings. In particular, an increase in CSR by one standard deviation improves the firm's credit rating by as much as 4.5%.

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Published: Sep 01, 2014
Vol/Issue: 43(3)
Pages: 505-531
License: View

Authors

Cite This Article

Pornsit Jiraporn, Napatsorn Jiraporn, Adisak Boeprasert, et al. (2014). Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification. Financial Management, 43(3), 505-531. https://doi.org/10.1111/fima.12044

Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification

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