Access to Finance and Corporate Social Responsibility

Evidence from a Quasi-Natural Experiment

Vanya Rusinova, Georg Wernicke

    Research output: Contribution to conferencePaperResearchpeer-review

    Abstract

    We provide causal evidence that investments into Corporate Social Responsibility (CSR) are affected by firms’ prior financial performance. More precisely we argue and test for a causal link between changes in firms’ cost of internal financing and CSR. To establish causality, we make use of the exogenous variation in firm-level financial constraints induced by the passage of the American Jobs Creation Act (AJCA) of 2004. We further examine the sensitivity of CSR investments to the level of financial constraints firms faced in the period prior to passage of the AJCA. We test our hypotheses with a data-set of the largest U.S. firms between 2001 and 2007. Results provide causal evidence that firm financial performance drives CSR investments. Further, we show that the impact of the Act varies based on firms’ prior level of financial constraints in an interesting way.
    Original languageEnglish
    Publication date2016
    Number of pages37
    Publication statusPublished - 2016
    EventThe DRUID 20th Anniversary Conference 2016: Innovation and the Dynamics of Change - Copenhagen Business School, København, Denmark
    Duration: 13 Jun 201615 Jun 2016
    Conference number: 38
    http://druid8.sit.aau.dk/druid/registrant/index/login/cid/20

    Conference

    ConferenceThe DRUID 20th Anniversary Conference 2016
    Number38
    LocationCopenhagen Business School
    CountryDenmark
    CityKøbenhavn
    Period13/06/201615/06/2016
    OtherThe DRUID Society Conference 2016
    SponsorCopenhagen Business School
    Internet address

    Keywords

    • Corporate social responsibility
    • Financial constraints
    • Financial performance
    • Difference-in-difference
    • The American Jobs Creation Act (AJCA) of 2004

    Cite this

    Rusinova, V., & Wernicke, G. (2016). Access to Finance and Corporate Social Responsibility: Evidence from a Quasi-Natural Experiment. Paper presented at The DRUID 20th Anniversary Conference 2016, København, Denmark.
    Rusinova, Vanya ; Wernicke, Georg. / Access to Finance and Corporate Social Responsibility : Evidence from a Quasi-Natural Experiment. Paper presented at The DRUID 20th Anniversary Conference 2016, København, Denmark.37 p.
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    abstract = "We provide causal evidence that investments into Corporate Social Responsibility (CSR) are affected by firms’ prior financial performance. More precisely we argue and test for a causal link between changes in firms’ cost of internal financing and CSR. To establish causality, we make use of the exogenous variation in firm-level financial constraints induced by the passage of the American Jobs Creation Act (AJCA) of 2004. We further examine the sensitivity of CSR investments to the level of financial constraints firms faced in the period prior to passage of the AJCA. We test our hypotheses with a data-set of the largest U.S. firms between 2001 and 2007. Results provide causal evidence that firm financial performance drives CSR investments. Further, we show that the impact of the Act varies based on firms’ prior level of financial constraints in an interesting way.",
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    Rusinova, V & Wernicke, G 2016, 'Access to Finance and Corporate Social Responsibility: Evidence from a Quasi-Natural Experiment' Paper presented at, København, Denmark, 13/06/2016 - 15/06/2016, .

    Access to Finance and Corporate Social Responsibility : Evidence from a Quasi-Natural Experiment. / Rusinova, Vanya ; Wernicke, Georg.

    2016. Paper presented at The DRUID 20th Anniversary Conference 2016, København, Denmark.

    Research output: Contribution to conferencePaperResearchpeer-review

    TY - CONF

    T1 - Access to Finance and Corporate Social Responsibility

    T2 - Evidence from a Quasi-Natural Experiment

    AU - Rusinova, Vanya

    AU - Wernicke, Georg

    PY - 2016

    Y1 - 2016

    N2 - We provide causal evidence that investments into Corporate Social Responsibility (CSR) are affected by firms’ prior financial performance. More precisely we argue and test for a causal link between changes in firms’ cost of internal financing and CSR. To establish causality, we make use of the exogenous variation in firm-level financial constraints induced by the passage of the American Jobs Creation Act (AJCA) of 2004. We further examine the sensitivity of CSR investments to the level of financial constraints firms faced in the period prior to passage of the AJCA. We test our hypotheses with a data-set of the largest U.S. firms between 2001 and 2007. Results provide causal evidence that firm financial performance drives CSR investments. Further, we show that the impact of the Act varies based on firms’ prior level of financial constraints in an interesting way.

    AB - We provide causal evidence that investments into Corporate Social Responsibility (CSR) are affected by firms’ prior financial performance. More precisely we argue and test for a causal link between changes in firms’ cost of internal financing and CSR. To establish causality, we make use of the exogenous variation in firm-level financial constraints induced by the passage of the American Jobs Creation Act (AJCA) of 2004. We further examine the sensitivity of CSR investments to the level of financial constraints firms faced in the period prior to passage of the AJCA. We test our hypotheses with a data-set of the largest U.S. firms between 2001 and 2007. Results provide causal evidence that firm financial performance drives CSR investments. Further, we show that the impact of the Act varies based on firms’ prior level of financial constraints in an interesting way.

    KW - Corporate social responsibility

    KW - Financial constraints

    KW - Financial performance

    KW - Difference-in-difference

    KW - The American Jobs Creation Act (AJCA) of 2004

    KW - Corporate social responsibility

    KW - Financial constraints

    KW - Financial performance

    KW - Difference-in-difference

    KW - The American Jobs Creation Act (AJCA) of 2004

    M3 - Paper

    ER -

    Rusinova V, Wernicke G. Access to Finance and Corporate Social Responsibility: Evidence from a Quasi-Natural Experiment. 2016. Paper presented at The DRUID 20th Anniversary Conference 2016, København, Denmark.