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We investigate whether a firm’s social capital, and the trust that it engenders, are viewed favorably by bondholders. Using firms’ corporate social responsibility (CSR) activities to proxy for social capital, we find no relation between CSR and bond spreads over the period 2006-2019.
However, during the 2008-2009 financial crisis, which represents a shock to trust and default risk, high-CSR firms benefited from lower bond spreads. These effects are stronger for firms with higher expected agency costs of debt and firms whose CSR efforts are more salient. During the crisis, high-CSR firms were also able to raise more debt at lower spreads and for longer maturities.
We document a new channel through which a firm’s sustainability policies can contribute positively to its bottom line, by reducing labor costs and by...
In this contribution, we focus on the market for stewardship, as this has been developing in the UK. We observe that the 2020 UK Stewardship Code more...