Corporate social responsibility performance and the cost of capital in <scp>BRICS</scp> countries. The problem of selectivity using environmental, social and governance scores

Fandella, Paola; Sergi, Bruno S.; Sironi, Emiliano

doi:10.1002/csr.2447

Cited by 29 publications

(4 citation statements)

References 38 publications

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“…Based on this argument, we report that higher customer loyalty has an impact on reducing high-return motivation as a consideration of customer investment, and it can reduce the cost of PSIA for banks. These findings are similar to and support previous findings that CSR has positive economic consequences for increasing firm value (Fombrun et al, 2000;Isnalita & Narsa, 2017), company's reputation (Zhang, 2022;Tran, 2022;Servaes & Tamayo, 2013), risk (Mukhibad & Hapsoro, 2023;Saraswati et al, 2021), and reducing the cost of debt (Binh, 2023;Fandella & Sergi, 2023;Xu et al, 2021).…”

Section: The Distribution Of Zakah and Qh Funds Negatively Affects Th...supporting

confidence: 91%

Bank social fund distribution and cost of profit-sharing investment account: evidence from Indonesia

Jayanto,

Mukhibad,

Aziz

2023

JIAFR

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Purpose - This study aims to prove the impact of the distribution of social funds (qardhul hasan-QH and zakah funds) on the cost of a Profit-Sharing Investment Account (PSIA) immediately and for a long period in Islamic banks.Method - The research is based on panel data from 11 Islamic commercial banks (IB) in Indonesia from 2009 to 2021. Data were analyzed using the generalized least squares (GLS) random-effects method with robust standard error.Result - This research proves that the distribution of social funds (the distribution of QH and zakah funds) has a positive economic impact in the short period but the distribution of social funds has a negative economic impact in the long period.Implication - This study contributes to bank directors in considering the social activities of banks funded by QH funds by considering the effectiveness of social fund distribution, hence having positive economic consequences for bank performance.Originality - This research contributes to the development of previous literature in two ways. First, we use CSR performance proxies that are different from previous studies, namely the distribution of QH and zakah funds. The distribution of these funds is a proof of the bank's legitimacy to care about social, economic, and environmental issues. Second, we use the cost of PSIA as an economic consequence of CSR performance.

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Section: The Distribution Of Zakah and Qh Funds Negatively Affects Th...supporting

confidence: 91%

Bank social fund distribution and cost of profit-sharing investment account: evidence from Indonesia

Jayanto,

Mukhibad,

Aziz

2023

JIAFR

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“…In addition, the realization of ESG disclosure in developing countries is costly. However, the potential rewards of ESG disclosure seem to outweigh the accounting costs (Fandella et al, 2023). This finding elaborates on ESG disclosure motives from an ex post perspective and overcomes the sample selection bias problem in the empirical evidence.…”

Section: Influencing Factors Of Esg Performance Of Private Enterprisesmentioning

confidence: 57%

Does state capital equity affect ESG performance of private firms?—based on the perspective of sustainable development of Chinese enterprises

Li,

Wang

2024

Front. Environ. Sci.

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Along with the intensification of global ecological problems, corporate environmental, social, and governance (ESG) issues have attracted extensive attention from the investment community, and solving these issues is crucial for sustainable development. However, little is known about the research on equity structure reform on corporate ESG performance, especially state-owned capital on private firms' ESG performance. To this end, we utilize the panel data of 1,589 privately listed firms in China from 2013 to 2021 to explore the impact of state-owned capital on the ESG performance of private firms. The findings suggest that state-owned capital significantly improves the ESG performance of private firms. In addition, the results of mechanism analysis indicate that state-owned capital stimulates ESG performance through the dual path of improving the mitigation of external financial constraint problems and internal control environment problems. We also find that firms' external environmental shocks enhance the extent to which state capital injection into private firms enhances ESG performance, and these external environmental shocks include the strength of environmental regulation in the region, whether the firms' attribute is that of heavily polluting industries, and the strength of external media attention. In summary, our findings support the conjecture that state capital injection into private firms will be followed by enhanced ESG performance, and the external environment is a factor that influences this process. Our study may provide lessons for the sustainable development of private firms and dig deeper into the internal root causes and external shock factors.

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“…We divided Scandinavian public companies into two groups (treatment and control) to determine whether ESG scores affected the cost of debt. According to Fandella et al (2023), such an analysis is relatively coarse; however, this approach has the advantage of avoiding information loss for companies without ESG scores in econometric analysis. We attempted to include all companies with ESG scores in the panel regression model, but some had missing values for the variables in the Bloomberg database.…”

Section: Discussionmentioning

confidence: 99%

Impact of corporate social responsibility on cost of debt in Scandinavian public companies

Aleknevičienė,

Stralkutė

2023

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Research background: In recent decades, companies have paid increasing attention to corporate social responsibility (CSR) and its related performance. Scandinavian countries lead the world in CSR and sustainability. The good CSR performance of Scandinavian companies has motivated studies on this phenomenon, particularly on the connection between a company's CSR and its performance. One of the most important performance indicators and value drivers is the cost of debt. Purpose of the article: This study assessed the impact of CSR on the cost of debt in Scandinavian public companies. Methods: The research was divided into two stages. In the first stage, Scandinavian public companies were divided into two groups (with and without ESG (environmental, social, governance) disclosure scores) to reveal differences in the cost of debt. In the second stage, a fixed-effects regression model for balanced panel data sets was applied from 2011 to 2020 to assess the impact of ESG and its pillars on the cost of debt. Findings & value added: The results revealed that the cost of debt of companies in Scandinavian countries with ESG disclosure scores was significantly lower. The ESG disclosure scores of these companies have increased significantly over the past 10 years. We found a positive impact of CSR on the cost of debt in Scandinavian public companies. The increase in ESG disclosure and pillar scores reduced the cost of debt. These findings are valuable from a scientific perspective. Scandinavian public companies with ESG scores have higher financial risk, but lower cost of debt. These results support the importance of investors' behavior, information asymmetry, and signaling. The findings have several implications for shareholders, managers and creditors. They suggest that creditors consider ESG disclosures when determining a borrower's creditworthiness. Additionally, it is a message to regulators that the debt market values ESG disclosures.

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Corporate social responsibility performance and the cost of capital in BRICS countries. The problem of selectivity using environmental, social and governance scores

Cited by 29 publications

References 38 publications

Bank social fund distribution and cost of profit-sharing investment account: evidence from Indonesia

Bank social fund distribution and cost of profit-sharing investment account: evidence from Indonesia

Does state capital equity affect ESG performance of private firms?—based on the perspective of sustainable development of Chinese enterprises

Impact of corporate social responsibility on cost of debt in Scandinavian public companies

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