How Does Corporate Social Responsibility Affect Credit Default Swap Spreads?

We examine the relationship between corporate social responsibility (CSR) and credit risk. We test how CSR strengths and concerns impact credit default swap (CDS) spreads during the global financial crisis period (2008–2009) and non-crisis periods (2003–2007 and 2010–2013). CSR concerns increase and CSR strengths reduce CDS spreads during the non-crisis period, whereas their effects change during the global financial crisis. CSR strengths during an adverse economic environment can indicate agency problems and overinvestment. The effect of CSR concerns becomes much larger during the global financial crisis, while that of CSR strengths can even increase CDS spreads.