Impact of CSR on cost of debt and cost of capital: Australian evidence
ISSN: 1747-1117
Article publication date: 3 May 2019
Issue publication date: 21 April 2020
Abstract
Purpose
This paper aims to investigate the association between the corporate social responsibility (CSR) and the cost of equity (COE) and cost of debt (COD).
Design/methodology/approach
The authors use the multivariate regression analysis approach to address the developed hypotheses.
Findings
Using a sample of 230 Australian listed firms from 2004 to 2016, the authors document that firms complying with higher CSR affect both COE and COD negatively, which means that CSR disclosure reduces financing cost.
Practical implication
These results support the risk mitigation perspective of CSR compliance, showing that both the investors and creditors may lower their expected returns because they find that CSR can mitigate potential business risk.
Originality/value
The authors extend the CSR research with both COE and COD.
Keywords
Acknowledgements
The authors greatly acknowledge the thoughtful comments and suggestions of two reviewers and the participants at 30th Asian-Pacific Conference on International Accountant Issues 2018. The research is, in part, based on a research project financed by Massey University Research Fund.
Citation
Bhuiyan, M.B.U. and Nguyen, T.H.N. (2020), "Impact of CSR on cost of debt and cost of capital: Australian evidence", Social Responsibility Journal, Vol. 16 No. 3, pp. 419-430. https://doi.org/10.1108/SRJ-08-2018-0208
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited