Klaus-Michael Menz
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ABSTRACT: The question of whether corporate social responsibility (CSR) has a positive impact on firm value has been almost exclusively
analysed from the perspective of the stock market. We have therefore investigated the relationship between the valuation of
Euro corporate bonds and the standards of CSR of mainly European companies for the first time in this article. Generally,
the debt market exhibits a considerable weight for corporate finance, for which reason creditors should basically play a significant
role in the transmission of CSR into the valuation of financial instruments. Given that socially responsible firms are often
regarded as economically more successful and less risky, they should have lower risk premia. The results of the empirical
analysis, however, reveal that based on an extensive data panel the risk premium for socially responsible firms – according
to the classification by SAM Group – was ceterius paribus higher than for non-socially responsible companies. However, only one case of the models investigated was weakly significant.
Thus, largely the relationship has to be classified as marginal; so CSR has apparently not yet been incorporated into the
pricing of corporate bonds.
Keywordscorporate social responsibility-corporate citizenship-sustainability-triple bottom line-social performance-credit spreads-corporate bond evaluation
Journal of Business Ethics 04/2012; 96(1):117-134. · 0.96 Impact Factor
