We investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to (1) reduced agency costs due to enhanced stakeholder engagement and (2) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. We provide evidence that both better stakeholder engagement and transparency around CSR performance are important in reducing capital constraints. The results are further confirmed using several alternative measures of capital constraints, a paired analysis based on a ratings shock to CSR performance, an instrumental variables approach, and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and environmental dimension of CSR.

U.S. Army students prepare for Tropical Storm Isaac. Image courtesy of Official U.S. Navy Imagery/Flickr. The term “resilience” has taken hold in the sustainability community over the past several years as a way to talk about responding to the anticipated next phase of environmental, economic, and social change. In this view, change — especially climate [...]

IBM chairman, president and CEO Virginia “Ginni” Rometty has been appearing in public a lot lately. In February, she spoke at the annual IBM investor briefing; in March, it was the Council on Foreign Relations — in both cases espousing a bold new future built upon big data. At the investors’ meeting, Rometty said that [...]

An exploration of spirituality, values, and sustainability in business When Jochen Zeitz and Anselm Grün first met onstage as "the manager and the monk," Zeitz was CEO and Chairman of Puma, and Father Grün was a monk serving as cellarer, the business manager of his Benedictine abbey. They came together to discuss their shared goal: what it means to lead and manage responsibly and sustainably in today's shifting world. Read More...