What is it about?
This study claims that CSR is firms’ strategic choice to internalize the cost from implicit contracts between the firms and their non-investing stakeholders affects firms’ operating and financial leverage. Firms CSR activities tend to increase firms' operating risk but tend to reduce firms' financial risk.
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Why is it important?
This study demonstrates that CSR is positively related to firms’ operating cost and we find evidence that CSR acts as a substitute for corporate debt tax shield when firms’ financial leverage is low.
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This page is a summary of: Corporate social responsibility and degrees of operating and financial leverage, Review of Quantitative Finance and Accounting, August 2016, Springer Science + Business Media,
DOI: 10.1007/s11156-016-0598-5.
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