The Impact of The Quality of Corporate Social Responsibility Disclosure on External Financing in the UK: Focusing on the Cost of Capital and Financing MethodsTools Lu, YUE (2019) The Impact of The Quality of Corporate Social Responsibility Disclosure on External Financing in the UK: Focusing on the Cost of Capital and Financing Methods. [Dissertation (University of Nottingham only)]
AbstractUsing 60 FTSE-350 listed companies in the UK over the period 2012-2016 as the research as samples, the research empirically analyzed the impact of CSRDQ on the cost of capital and the different sensitivity of debt and equity capital cost to this impact. The results show that the quality of CSR information disclosure has a significant negative impact on the equity and debt financing costs of listed companies. Improving the quality of CSRD can effectively reduce the capital cost of listed companies. High-quality corporate social responsibility information disclosure brings more benefits to prove the legitimacy of enterprises, eliminate the information asymmetry between managers, investors, and creditors, and reduce the risk premium related to the risk uncertainty of external investors, thus reducing the capital cost. The sensitivity of debt investment cost and equity investment cost under the same quality is also discussed. As two different types of capital providers, shareholders have narrower access to information than creditors, weaker information processing and risk prevention ability, and cannot effectively avoid information risks. Therefore, shareholders are more sensitive to the quality of social responsibility information disclosed by enterprises. Therefore, to obtain external financing more easily and cheaply, listed companies should improve their social responsibility disclosure quality.
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