The U.S. bond market seems to value firms’ corporate social-responsibility performance, say Wenxia Ge and Mingzhi Liu of the University of Manitoba. A 1-point increase in a company’s score on the researchers’ open-ended CSR-performance metric is associated with a decrease of 3.20 basis points in the risk premium that firms must pay for bond financing. The effect can save a company with high-performing CSR $1.66 million per bond issue in interest costs, according to an analysis of more than 4,000 new public-bond issues. The findings are in line with past studies showing that disclosure of CSR activities can reduce companies’ costs of equity capital and private debt.
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