ABSTRACT
This article examines the link between corporate social responsibility (CSR) and cost of bank loans (CBL) in China. We find that there exists an inverse U-shape relationship between CSR and CBL. In addition, CSR threshold for state-owned enterprises (SOEs) is higher than for non-SOEs. In particular, CSR threshold for SOEs is lower in regions with high degree of marketization than in regions with low degree of marketization. The findings indicate that value-destroying effect occurs during CSR underinvestment phase, which is different from the overinvestment view. Moreover, the effect of CSR on CBL also depends on contextual factors such as firm ownership and marketization level.
Funding
This article is sponsored by the National Natural Science Foundation of China under Grant No. 71672055 and the Social Science Funds of Hunan Province (Approval No. 14 BR13).
Notes
1. Wood and Jones (Citation1995) argue that comprehensive measure of CSR is required if a robust CSP–CFP relation is to be found since CSP–CFP relation is best analyzed with regard to stakeholder theory. Brammer and Millinton (Citation2008) also call for extending their exclusive analysis on charitable giving to other specific dimension of CSR given that CSR is a rich and multinational construct.