The Relationship between Corporate Social Responsibility and Financing Behavior
| Autor: | Pei-Shan Tung, 董珮珊 |
|---|---|
| Rok vydání: | 2012 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 100 During the past five years, natural disasters occurred owing to global climate changed dramatically. For example, the nuclear accident following the earthquake in Japan, have raised world environmental awareness. As attention to environmental sustainability grows, numerous firms have adopted sustainability and environmental strategies as part of their social responsibility to stakeholders. Numerous studies concentrated on the relationship between company’s financial performance with corporate social responsibility (CSR). Although about 70 percent of the related studies showed a significantly positive relationship between CSR and financial performance (Dilling, 2010), there is no consensus about whether CSR leads to better corporate financial performance. This study examines the effect of CSR from another viewpoint. Based on the researches of Sharfman and Fernando (2008) and Ghoul et al. (2010), this investigation posits that companies with a socially responsible corporate policy have lower costs of capital because of greater risk management, and examines whether CSR is helpful for companies’ financing behavior during the financial crisis period since 2007 to 2009. Additionally, the adjustment speed of leverage is estimated to assess whether socially responsible companies can revert to their target leverage flexibly because of lower risk and easier access to capital markets resulting from implementing CSR. Finally, the impact of reputation for CSR on financing behavior is examined. This study also attempts to investigate the attitudes of investors toward socially responsible companies. Methodologically, this investigation uses the basic pecking order equation with the fixed effect and random effect models to examine the financing behavior of the companies in the FTSE4Good Index which includes companies emphasizing social responsibility. For comparison, the companies in gambling, weapons and tobacco industries in S&;P 500, the SINdex and the Vice Fund are also examined. Additionally, the companies in CSR Index developed by Reputation Institute and Boston College are regarded as CSR firms. This study examines whether the perception of CSR by the general public affects company’s financing behavior. The empirical results indicate that the risk management effect of social responsibility is recognized by capital markets. The issuance of equity significantly declines during the financial crisis period for S&;P 500, SINdex and Vice Fund companies. However, FTSE4Good companies significantly increases to issue equity, suggesting that investors in equity market choose socially responsible companies with sustainable policy when the market is in an extremely unstable situation with stock declining seriously. CSR indeed protects the financing capacity of firms from an abrupt stock market sell-off. Furthermore, the fastest adjustment speed of leverage also shows that financing behavior is more flexible for socially responsible firms than other companies. Although investors in equity market who demand short-term financial performance do not emphasize socially responsible companies, those in debt market intend to choose socially responsible companies with sustainability and low default risk. For the past three years, the financial crisis occurred in the Euro zone, induced by Greece’s heavily debt, seems likely to affect other areas of the world. This study finds that socially responsible companies have investors’ favor during the crisis period. For managers of companies, it is useful to invest in social responsibility activities because it can protect financing capacity for companies especially in unstable market conditions. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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