Abstract
This paper examines the effects of corporate social performance on bond volatility. We find a strong positive relationship between social performance and volatility after controlling for bond characteristics and firm fundamentals. The empirical results show that the effect concentrates on social performance strengths and is robust to alternative measures, alternative sample periods and endogeneity controls. The main mechanism through which CSR spending affects bond market uncertainty is overinvestment inasmuch as social performance-related spending raises bond investor concerns. In addition, we find that the effect is more pronounced for firms with higher CEO risk-taking incentives and more active tax avoidance practices.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.