Corporate social responsibility (CSR) disclosure and the choice between bank debt and public debt

Weiqiang Tan, Albert Tsang, Wenming Wang, Wenlan Zhang

    Research output: Contribution to journalJournal articlepeer-review

    39 Citations (Scopus)

    Abstract

    SYNOPSIS: This study examines whether and how corporate social responsibility (CSR) disclosure plays a role in firms' choices of public versus private debt financing. We find that borrowing firms with higher levels of CSR disclosure tend to rely more on public debt than private debt. Further analyses reveal that the relation between CSR disclosure and firms' reliance on public debt is stronger for borrowing firms with higher financial reporting quality, and with standalone or externally assured CSR reports. In addition, we find that borrowing firms with higher levels of CSR disclosure tend to issue bonds at more favorable terms (i.e., lower bond yield spread and longer maturity). Together, our findings are consistent with the notion that nonfinancial CSR disclosure plays an incrementally important role in a firm's debt placement decisions.

    Original languageEnglish
    Pages (from-to)151-173
    Number of pages23
    JournalAccounting Horizons
    Volume34
    Issue number1
    Early online date1 Oct 2019
    DOIs
    Publication statusPublished - Mar 2020

    Scopus Subject Areas

    • Accounting

    User-Defined Keywords

    • CSR disclosure
    • Debt contracting
    • Nonfinancial disclosure
    • Public bond

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