Open Access
Journal Article
Corporate social responsibility and the likelihood of external financing
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DAN Department of Management & Organizational Studies, The University of Western Ontario, London, Canada
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JEA 2024 3(2):57; https://doi.org/10.58567/jea03020005
Received: 26 June 2023 / Accepted: 25 July 2023 / Published Online: 15 June 2024
Abstract
This paper empirically investigates the relation between firm performance in corporate social responsibility (CSR) and the need and likelihood of external financing to test the predictions of agency and stakeholder theories. Empirical results from Logit, Linear Probability Model, OLS and Firm fixed effects regressions indicate that CSR is negatively related to the likelihood and level of external financing. Further analysis indicates that CSR has a negative and significant effect on both net equity issued (NEI) and net debt issued (NDI), the two components of external financing. Overall, the empirical results support the predictions of agency theory.
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