The moderating effect of Corporate Social Responsibility (CSR) on the relationship between the need for debt and the actual debt level
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2021-07-19
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en
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This study investigates the moderating effect of Corporate Social Responsibility on the relationship between the need for debt and the actual debt level. A testable prediction of the pecking order theory (Shyam-Sunder and Myers, 1999) was used, where the funding deficit demonstrates the complete reliance on external finance explained through the change in debt level. Therefore, this thesis refers to the deficit as the need for debt finance. The moderating effect has been examined for a sample of 117 firms located in eight Western European countries during the years 2010-2019 using fixed-effect regression. The main finding of the analysis is that there is an indication of a moderating effect of CSR performance on the relationship between the need for debt and the actual change in debt level, however, the result is not robust. This finding has the potential to have a substantial impact on management decision-making since it might suggest that managers should disregard CSR performance in order to obtain the preferred level of debt.
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Faculteit der Managementwetenschappen