Date of Award

Fall 12-2020

Degree Type


Degree Name


Degree Program

Financial Economics


Business Administration

Major Professor

Mohammad Hassan

Second Advisor

Walter Lane

Third Advisor

Arja Turunen-Red

Fourth Advisor

Gregory Price


This dissertation consists of two essays that examine the role of corporate social responsibility (CSR) in finance. In the first essay, we examine the bondholder wealth effects of socially responsible firms. Using an extensive U.S sample from 2006 to 2016 and two methodologies – corporate yield spreads and bond credit ratings – we provide evidence that proactive environmental and social practices are reflected in the price of corporate bonds. Furthermore, we examine the impact of managerial ownership on the relationship between CSR and bondholder wealth effects. We postulate that higher equity ownership induces managers to take on more firm risk in the interest of shareholders, thereby increasing the company’s default risk. Empirical findings reveal that CSR plays a significant role in reducing the risk premium of corporate bonds and in assessing the credit quality of specific bond issues and that managerial ownership attenuates the negative relation between CSR and bondholder wealth. Results are robust to various controls for firm and bond specific factors, alternative model specifications, and industry membership.

The second essay identifies the factors that motivate organizations to invest in corporate social responsibility (CSR). Using a comprehensive sample of publicly traded, non-financial, U.S. domiciled firms for the period between 2006-2016, we identify and examine several firm and CEO characteristics that potentially explain the extent of firms’ devotion to corporate social investments. We find evidence that advertising intensive firms and financially stable firms are more likely to engage in socially responsible activities, while risker firms demonstrate lower levels of CSR. Furthermore, we address the question of whether certain types of CEOs are more likely to invest in CSR by exploring the role of CEO attributes. Empirical results indicate that female CEOs are more intrinsically motivated to undertake long-term investments in socially responsible initiatives pertaining to environmental concerns and diversity issues. We also find support that the CEO compensation structure is more related to the employee relations and environmental concerns dimensions.


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