Junyong Lee , Kyounghun Lee , Frederick Dongchuhl Oh
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引用次数: 0
Abstract
This study examines the effect of credit rating concerns on corporate environmental, social, and governance (ESG) behavior. We use the plus or minus test on a large sample of ESG scores and S&P credit ratings of U.S. publicly traded firms from 2003 to 2017. We find that firms with credit rating concerns often increase their ESG activities. This finding holds even after we control for various factors affecting ESG practices. Moreover, firms on the boundary between investment- and speculative-grade ratings significantly improve their ESG performance compared to other cases. Finally, we find evidence that the positive effect of credit rating concerns on ESG activities is pronounced during the global financial crisis and then strengthens further. Overall, our study highlights the impact of credit ratings on corporate ESG behavior. (JEL G24, G32, M14)
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