Corporate Social Responsibility: Is it Rewarded by the Corporate Bond Market? A Critical Note

Journal of Business Ethics

Volumn 96, Issue 1, 2010, Pages 117-134

  Menz, Klaus Michael ^a  

^a HSBC Global Asset Management (Deutschland) GmbH   (Germany)

Author keywords

corporate bond evaluation; corporate citizenship; corporate social responsibility; credit spreads; social performance; sustainability; triple bottom line

Indexed keywords

EID: 84755161385     PISSN: 01674544     EISSN: 15730697     Source Type: Journal    
DOI: 10.1007/s10551-010-0452-y     Document Type: Article

References (94)

1. Akerlof, G., 1980, A Theory of Social Custom, of Which Unemployment May be One Consequence, Quarterly Journal of Economics 94, pp. 749-775.
2. Alchian, A. and H. Demsetz, 1972, Production, information costs, and economic organization, American Economic Review 62, pp. 777-795.
3. Alexander, G., A. Edwards and M. Ferri, 2000, What Does the Nasdaq's High-Yield Bond Market Reveal about Bondholder-Stockholder Conflict?, Financial Management 30, pp. 23-29.
4. Amato, J. V. and E. M. Remolona: 2003, 'The Credit Risk Premium Puzzle', BIS Quarterly ReviewDecember, 57-72.
5. Arellano, M., 1987, Computing robust standard errors for within-groups estimators, Oxford Bulletin of Economics and Statistics 49, pp. 431-434.
6. Baker, M. and J. Wurgler, 2002, Market Timing and Capital Structure, Journal of Finance 57, pp. 1-32.
7. Baltagi, B. H., 2001, Econometric Analysis of Panel Data, Second Edition, John Wiley & Sons: West Sussex, England.
8. Barber, B. M. and T. Odean, 2000, Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors, Journal of Finance 55, pp. 773-806.
9. Bassen, A., K. Meyer and J. Schlange: 2006, The Influence of Corporate Social Responsibility on the Cost of Capital - An Empirical Analysis. Working Paper, Universität Hamburg.
10. Beck, N. and J. Katz, 1995, What to do (and not do do) with time-series cross-section data, American Political Science Review 89, pp. 634-647.
11. Bollen, L. H. H., G. M. H. Mertens, R. H. G. Meuwissen, J. J. F. van Raak and C. Schelleman: 2005, Classification and Analysis of Major European Business Failures. MARC Research Report, University Maastricht, Erasmus University.
12. Bradley, M., D. Chen, G. Dallas and E. Snyderwine: 2007, The Relation Between Corporate Governance and Credit Risk, Bond Yields and Firm Valuation. Working Paper, Duke University.
13. Buchanan, B. and T. Yang, 2005, The Benefits and Costs of Controlling Shareholders: the Rise and Fall of Parmalat, Research in International Business and Finance 19, pp. 27-52.
14. Cornell, B. and A. Shapiro: 1987, Corporate Stakeholders and Corporate Finance. Financial Management 16, 5-14.
15. Crouhy, M., Galai, D. and R. Mark, 2001, Prototype risk rating system. Journal of Banking and Finance 25, pp. 47-95.
16. Cyert, R. M. and J. G. March, 1963, A Behavioral Theory of the Firm, Prentice Halls: Englewood Cliffs, NJ.
17. Derwall, J., Gunster, N., Bauer, R. and Koedijk, 2005, The Eco-Efficiency Premium Puzzle, Financial Analyst Journal 61, pp. 51-63.
18. Deutsche Bundesbank: 2004, Neuere Entwicklungen am Markt für Unternehmensanleihen, Monatsbericht, April, pp. 15-26.
19. Di Giulio, A., P. O. Migliavacca and A. Tencati: 2007, What Relationship Between Corporate Social Performance and the Cost of Capital. Working Paper, Bocconi University.
20. Drakos, K., 2001, Fixed Income Excess Returns and Time to Maturity, International Review of Financial Analysis 10, pp. 431-442.
21. ECB: 2007, Corporate Finance in the Euro Area. Occasional Paper Series No. 63, June, Frankfurt.
22. Ederington, L. H. and J. Yawitz: 1987, 'The Bond Rating Process', in E. I. Altman and M. J. McKinney (Hrsg.), Handbook of Financial Markets and Institutions (John Wiley and Sons, New York), pp. 23. 3-23. 57.
23. Elster, J., 1998, Emotions and Economic Theory, Journal of Economic Literature 36, pp. 47-74.
24. Esty, B., Knoop, C. and A. Sesia, 2005, The Equator Principles: An industry approach to managing environmental and social risks, Harvard Business School Case Study 9, pp. 205-214.
25. European Commission. 2002, Communication on Corporate Social Responsibility: A Business Contribution to Sustainable Development, European Commission, Brussels.
26. European Sustainable and Responsible Investment Forum (Eurosif): 2006, Socially Responsible Investment Among European Institutional Investors.
27. Fama, E. F. and K. R. French, 1993, Common risk factors in the returns on stocks and bonds. Journal of Financial Economics 33, pp. 3-56.
28. Fama, E. F. and M. Jensen, 1983, Separation of Ownership and Control, Journal of Law and Economics 26, pp. 301-325.
29. Fehr, E. and A. Falk, 1999, Wage Rigidities in a Competitive Incomplete Contract Market, Journal of Political Economy 107, pp. 106-134.
30. Fehr, E. and S. Gächter, 2000, Fairness and Retaliation: The Economics of Reciprocity, Journal of Economic Perspectives 14, pp. 154-181.
31. Fehr, E. and S. Gächter, 2002, Altruistic punishment in humans, Nature 415, pp. 137-140.
32. Festinger, L., 1957, A Theory of Cognitive Dissonance, The Stanford University Press: Stanford.
33. Fong, H. G., and F. J. Fabozzi, 1985, Fixed Income Portfolio Management. Dow Jones-Irwin: Homewood, Illinois.
34. Fons, J.: 1994, 'Using Default Rates to Model the Term Structure of Credit Risk', Financial Analysts Journal50, 25-32.
35. Geczy, C., R. F. Stambaugh and D. Levin: 2005, Investing in Socially Responsible Mutual Funds. Working Paper, University of Pennsylvania.
36. Godfrey, P., 2005, The Relationship Between Corporate Philanthropy and Shareholder Wealth: a Risk Management Perspective, Academy of Management Review 30, pp. 777-798.
37. Griffin, J. J. and J. F. Mahon, 1997, The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-Five Years of Incomparable Research, Business & Society 36, pp. 5-31.
38. Grundfest, J. A., 1993, Just Vote No: A Minimalist Strategy for Dealing with Barbarians Inside the Gates, Stanford Law Review 45, pp. 857-937.
39. Güth, W., Schmittberger, R. and B. Schwarze, 1982, An experimental analysis of ultimatum bargaining, Journal of Economic Behavior and Organization 3, pp. 367-388.
40. Haigh, M. and J. Hazelton, 2004, Financial Markets, A Tool for Social Responsibility?, Journal of Business Ethics 52, pp. 62-66.
41. Heinkel, R., Krause, A. and J. Zechner, 2001, The effect of green investment on corporate behaviour, Journal of Financial and Quantitative Analysis 35, pp. 431-449.
42. Hicks, J. R., 1939, Value and Capital: An inquiry into some fundamental principles of economic theory, Clarendon Press: Oxford.
43. Hong, H. and M. Kacperczyk: 2005, The Price of Sin: The Effect of Social Norms of Markets. Working Paper, Princeton University.
44. HSBC: 2009, HSBC Holdings Plc Sustainability Report 2008. HSBC Holdings Plc, London, UK.
45. Jensen, M., 2001, Value maximization, stakeholder theory, and the corporate objective function, Journal of Applied Corporate Finance 14, pp. 8-21.
46. Johnsen, D. B., 2003, Socially Responsible Investing, A Critical Appraisal, Journal of Business Ethics 43, pp. 219-222.
47. Kahneman, D., Ritov, I. and D. Schkade, 1998, Economic Preferences or Attitude Expressions? An Analysis of Dollar Responses to Public Issues, Journal of Risk and Uncertainty 19, pp. 220-242.
48. Kahneman, D. and A. Tversky, 1982, The psychology of preferences, Scientific American 246, pp. 160-173.
49. Kao, D. L.: 2000, 'Estimating and Pricing Credit Risk: An Overview', Financial Analysts Journal56, 50-66.
50. Klassen, R. and C. McLaughlin, 1996, The impact of environmental management on firm performance, Management Science 42, pp. 1199-1214.
51. Körner, K., 2005, Policy Making and the Role of Government Changing Governance Patterns and CSR, Corporate Governance 5, pp. 151-158.
52. Locke, P. R. and S. C. Mann, 2005, Professional Trader Discipline and Trade Disposition, Journal of Financial Economics 76, pp. 401-444.
53. Longstaff, F. A. and E. Schwartz, 1995, A Simple Approach to Valuing Risky Fixed and Floating Rate Debt, Journal of Finance 50, pp. 789-820.
54. Margolis, J. D. and J. P. Walsh, 2001, People and profits? The search for a link between a company's social and financial performance, Lawrence Elbaum, Mahwah, N. J.
55. Margolis, J. D. and J. P. Walsh, 2003, Misery loves companies: Rethinking social initiatives by business, Administrative Science Quarterly 48, pp. 268-305.
56. McGuire, J. B., Sundgren, A. and T. Schneeweiss, 1988, Corporate social responsibility and firm financial performance, Academy of Management Journal 31, pp. 854-872.
57. McWilliams, A. and D. Siegel, 2000, Corporate social responsibility and financial performance: correlation or misspecification? Strategic Management Journal 21, 603-609.
58. Menz, K-M. and M. Nelles, 2006, Corporate Governance und Credit Spreads, Finanz Betrieb 8, pp. 628-636.
59. Mercer: 2007, The Language of Responsible Investment - An Industry Guide to Key Terms and Organisations. Mercer Investment Consulting, London.
60. Merrill Lynch: 2000, Merrill Lynch Global Bond Indices-Rules of Construction and Calculation Methodology. Merrill Lynch & Co.
61. Merton, R. C., 1974, On the Pricing of Corporate Debt: The Risk Structure of Interest Rates, Journal of Finance 29, pp. 449-470.
62. Monks, R. and N. Minnow, 1995, Watching the Watchers: Corporate Governance for the Twenty-first Century, Blackwell: Malden, MA.
63. Myers, S. C. and N. S. Majluf, 1984, Corporate Financing and Investment Decisions when Firms have Information Investors do not have, Journal of Financial Economics 13, pp. 187-221.
64. Nelles, M. and K-M. Menz, 2007, Die empirische Bewertung von Euro-Unternehmens anleihen - Eine panelökonometrische Analyse, Finanz Betrieb 9, pp. 513-523.
65. Nelles, M. and K-M. Menz, 2008, Corporate Governance und Credit Spreads - Korrelation, Kausalität oder weder noch? Forschungspapier, Universität Wuppertal.
66. O'Loughlin, J. and R. Thamotheram: 2006, Enhanced Analytics for a New Generation of Investor - How the Investment Industry Can Use Extra-Financial Factors in Investing. Working Paper, USS Ltd.
67. Orlitzky, M. and J. D. Benjamin, 2001, Corporate social performance and firm risk: A metaanalytic review, Business & Society 40, pp. 369-396.
68. Orlitzky, M., Schmidt, F. and S. Rynes, 2003, Corporate social and financial performance: A meta-analysis, Organization Studies 24, pp. 403-411.
69. Phillips, Hager & North: 2007, Does Socially Responsible Investing Hurt Investment Returns? Research Paper, Phillips, Hager & North Investment Management Ltd., Vancouver.
70. Post, J. E., Preston, L. E. and S. Sachs, 2002, Managing the extended enterprise: The new stakeholder view, California Management Review 45, pp. 6-28.
71. Preston, L. E. and D. P. O'Bannon, 1997, The corporate social-financial performance relationship: A typology and analysis, Business and Society 36, pp. 419-429.
72. Rappaport, A., 1986, Creating Shareholder Value. The Free Press, New York, NY.
73. Renneboog, L., Ter Horst J. and C. Zhang, 2008, Socially responsible investments: Institutional aspects, performance, and investor behavior, Journal of Banking and Finance 32, pp. 1723-1742.
74. Scholtens, B., 2006, Finance as a Driver of Corporate Social Responsibility, Journal of Business Ethics 68, pp. 19-33.
75. Scholtens, B., 2008, A Note on the Interaction between Corporate Social Responsibility and Financial Performance, Ecological Economics 68, pp. 46-55.
76. Schröder, M., 2005, Is There a Difference? The Performance Characteristics of SRI Equity Indexes, ZEW Discussion Paper No. 05-50, July.
77. Schultz, P., 2001, Corporate bond trading costs and practices: a peek behind the curtain, Journal of Finance 56, pp. 677-698.
78. Sharfman, M., 1996, The Construct Validity of the Kinder, Lydenberg and Domini Social Performance Rating Data, Journal of Business Ethics 15, pp. 287-296.
79. Shiller, R. J., 2000, Conversation, information and herd behaviour, American Economic Review 85, pp. 181-185.
80. Shleifer, A.: 2004, Does Competition Destroy Ethical Behavior? In American Economic Association Papers and Proceedings 94, pp. 414-418.
81. Shleifer, A. and R. Vishny, 1986, Large Shareholders and Corporate Control, Journal of Political Economy 96, pp. 461-488.
82. Simon, H. A., 1955, A Behavioral Model of Rational Choice, Quarterly Journal of Economics 69, pp. 99-118.
83. Simon, H. A., 1957, Models of Man: Social and Rational, John Wiley & Sons: New York.
84. Smith, M. P., 1996, Shareholder Activism by Institutional Investors. Evidence from CalPERS, Journal of Finance 51, pp. 227-252.
85. Soppe, A., 2004, Sustainable Corporate Finance, Journal of Business Ethics 53, pp. 213-224.
86. Spicer, B. H., 1978, Investors, Corporate Social Performance and Information Disclosure: An Empirical Study, The Accounting Review 53, pp. 94 -111.
87. Statman, M., 2006, Socially Responsible Indexes: Composition, Performance, and Tracking Error, Journal of Portfolio Management 32, pp. 100-109.
88. Steger, U., Ionescu-Somers, A. and O. Salzmann, 2007, The Economic Foundations of Corporate Sustainability, Corporate Governance 7, pp. 162-177.
89. Sufi, A., 2009, The real effects of debt certification: evidence from the introduction of bank loan ratings, Review of Financial Studies 22, pp. 1659-1691.
90. Tirole, J., 2001, Corporate governance,. Econometrica 69, pp. 1-35.
91. Trivers, R., 1971, The Evolution of Reciprocal Altruism, Quarterly Review of Biology 46, pp. 35-57.
92. Trivers, R., 1985, Social Evolution, Benjamin/Cummings: Menlo Park, CA.
93. White, M. D., 2004, Can Homo Economicus Follow Kant's Categorial Imperative? Journal of Socio-Economics 33, pp. 89-106.
94. Winter, S. G., 1964, Review of 'A Behavioral Theory of the Firm', American Economic Review 54, pp. 144-148.