Corporate Social Responsibility (CSR) Disclosure and the Choice between Bank Debt and Public Debt

Weiqiang Tan, Hiu Leong Tsang, Wenminng Wang, Wenlan Zhang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

Abstract

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
JournalAccounting Horizons
Volume34
Issue number1
Publication statusPublished - Mar 2020

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