재무연구 제 권 호 (2017년 5월)
Asian Review of Financial Research, Vol., No..
pp.1490~1553
pp.1490~1553
Is Doing Good Good for Your Credit Rating? - A Trust-based Hypothesis and Global Evidence
Kiyoung Chang University of South Florida Sarasota-Manatee, College of Business
Ying Li University of Washington Bothell, School of Business
Hyeongsop Shim Ulsan National Institute of Science and Technology, School of Business Administration
Whether and how doing good (corporate social responsibility, CSR) makes business sense has been a source of constant debate. We suggest that trust underlies the mixed theory and empirical evidence of such debate. Doing good helps sustain a firm’s long-term credit rating by building trust, which alleviates stakeholder relationship uncertainties in incomplete contracts. Doing good is good for credit ratings when it is effective in building trust, when and where the marginal benefit of “earned trust” is high, and where societal trust is high and likely to mitigate moral hazard problems. Our results are robust to endogeneity and robustness tests.
Kiyoung Chang
Ying Li
Hyeongsop Shim
Whether and how doing good (corporate social responsibility, CSR) makes business sense has been a source of constant debate. We suggest that trust underlies the mixed theory and empirical evidence of such debate. Doing good helps sustain a firm’s long-term credit rating by building trust, which alleviates stakeholder relationship uncertainties in incomplete contracts. Doing good is good for credit ratings when it is effective in building trust, when and where the marginal benefit of “earned trust” is high, and where societal trust is high and likely to mitigate moral hazard problems. Our results are robust to endogeneity and robustness tests.
Corporate social responsibility,Trust,Crisis,Credit rating,Cost of debt
