Corporate social responsibility and default risk: International evidence

Using a large sample of firms from 36 countries between 2002 and 2016, this study investigates the relationship between corporate social responsibility (CSR) and default risk, with a focus on the differential effect conditional on the lengths of time horizons. We find that CSR is negatively associated with probability of default and the effect is stronger in the long term than in the short run. Further, the impact of CSR on firm default probability appears to be greater in countries with weaker capital markets and legal institutions. Overall, our findings provide evidence supporting the role of CSR in filling institutional voids.