New Harvard paper on the business case for corporate responsibility

Here’s a new working paper from Harvard on the business case for responsible capitalism.

It’s titled “Corporate Social Responsibility and Access to Finance“. Interestingly the abstract notes that:

“We hypothesize that better access to finance can be attributed to reduced agency costs, due to enhanced stakeholder engagement through CSR and reduced informational asymmetries, due to increased transparency through non-financial reporting. Using a large cross-section of firms, we show that firms with better CSR performance face significantly lower capital constraints.”

Also that: “The results confirm that firms with better CSR performance face lower capital constraints”. (From the body of the article, I did read it!)

And that: “we find that the relation is primarily driven by social and environmental performance, rather than corporate governance”. (abstract)

This last point chimes, sort of, with something I heard in an academic meeting at Birkbeck, a college of the University of London, where I teach for three months a year, part time.

In the meeting, an academic with a corporate governance PHD posited that in his view, after decades of research, the types of board structure (within reason!) a company utilises matters much less than the values of the individuals who are on that board with regard to ethical performance and effective governance.

The Harvard article linked above has the usual confusing terminology often used in academia, but there might be some useful stats in it for you around CR and access to capital.

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