2019
DOI: 10.1108/ijaim-11-2017-0141
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The impact of corporate social and environmental practices on the cost of equity capital: UK evidence

Abstract: Purpose There has been an ongoing call from various groups of stakeholders for social and environmental practices to be integrated into companies’ operations. A number of companies have responded by engaging in socially and environmentally responsible activities, while others choose not to participate in these activities, which incur additional costs. The absence of consensus regarding the economic implications of social and environmental practices provides the impetus for this paper. This study aims to examin… Show more

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Cited by 28 publications
(34 citation statements)
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References 74 publications
(133 reference statements)
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“…Based on the regression analysis results, disclosing more CSR can reduce COE. This result was in line with researches conducted by Ahmed et al (2019); Bhuiyan & Nguyen (2019); Cuadrado-Ballesteros, Garcia-Sanchez & Martinez Ferrero (2016); Cui et al (2018); Michaels & Grüning (2017); Pusparida & Harto (2016); Suto & Takehara (2017); Xu et al (2015). Companies with better CSR performance have significantly lower COE.…”
Section: Hypothesis Analysissupporting
confidence: 88%
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“…Based on the regression analysis results, disclosing more CSR can reduce COE. This result was in line with researches conducted by Ahmed et al (2019); Bhuiyan & Nguyen (2019); Cuadrado-Ballesteros, Garcia-Sanchez & Martinez Ferrero (2016); Cui et al (2018); Michaels & Grüning (2017); Pusparida & Harto (2016); Suto & Takehara (2017); Xu et al (2015). Companies with better CSR performance have significantly lower COE.…”
Section: Hypothesis Analysissupporting
confidence: 88%
“…Shareholders will demand higher returns to companies with poor CSR performance (Xu et al, 2015). In addition, companies that have a broad impact on CSR activities can improve sustainable competitive advantage by decreasing undesirable effects of their business activities on the environment and society while also obtaining low COE costs (Ahmed et al, 2019). Summary of the regression analysis are showed in table 3.…”
Section: Hypothesis Analysismentioning
confidence: 99%
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“…It has been argued that the voluntary disclosure of information can allow the firm to have greater access to resources (Jensen, 2002), such as reducing the external cost of capital (Botosan, 2006;Beiner et al, 2006;Ahmed et al, 2019), reducing earnings management and tax avoidance (Liu and Lee, 2019;Sial et al, 2019), reducing reputational risk (Hogan and Lodhia, 2011) and reducing political costs (Cheung et al, 2010), ultimately improving the value of the firm (Ntim et al, 2012); moreover, managing ties with key stakeholders may mitigate the likelihood of negative regulatory action (Freeman, 1984;Berman et al, 1999;Hillman and Keim, 2001). CSR choices, such as both financial and non-financial employee benefits, will enhance employees' productivity and/or financial performance.…”
Section: Theoretical Development and Hypothesismentioning
confidence: 99%
“…CSR reporting also allows investors to make informed decisions, as a firm can thereby reduce the information asymmetry between managers and investors and, ultimately, reduce the information costs incurred by investors (Cormier et al, 2009), which may attract investors to the firm. By releasing transparent information about CSR activities, a firm can reduce the external cost of capital (Botosan, 2006;Beiner et al, 2006;Ahmed et al, 2019) while it is evident that good corporate governance may lead to quality of CSR reporting (Adel et al, 2019).…”
Section: Introductionmentioning
confidence: 99%