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JAAR
20,4 Corporate social responsibility
disclosure and debt financing
Amal Hamrouni
La Rochelle Business School Excelia Group, La Rochelle, France and
394 CEREGE Poitiers (EA1722), Universite de Poitiers, Poitiers, France
Received 29 January 2018 Rim Boussaada
Revised 18 July 2018 Faculty of Law, Economics and Management of Jendouba, Jandouba, Tunisia and
29 October 2018
11 January 2019 ISG, GEF2A lab, Université de Tunis, Tunis, Tunisia, and
Accepted 17 January 2019
Nadia Ben Farhat Toumi
IUT Cannes, Nice Sophia Antipolis University, Nice, France

Abstract
Purpose – The purpose of this paper is to examine how corporate social responsibility (CSR) reporting
influences leverage ratios. In particular, this paper aims to determine whether firms with higher CSR
disclosure scores have better access to debt financing.
Design/methodology/approach – This paper uses a panel data analysis of non-financial French firms
listed on the Euronext Paris Stock Exchange and members of the SBF 120 index from 2010 to 2015. The
environmental, social and governance (ESG) disclosure scores that are collected from the Bloomberg database
are used as a proxy for the extent of ESG information disclosures by French companies.
Findings – The empirical results demonstrate that leverage ratios are positively related to CSR disclosure
scores. In addition, the results show that the levels of long-term and short-term debt increase with the
disclosure of ESG information, thus suggesting that CSR disclosures play a significant role in reducing
information asymmetry and improving transparency around companies’ ESG activities. This finding meets
the lenders’ expectations in terms of extrafinancial information and attracts debt financing sources.
Research limitations/implications – The research is based only on the quantity of the ESG information
disclosed by French companies and does not account for the quality of the CSR disclosures. The empirical
model omits some control variables (e.g. the nature of the industry, the external business conditions and the
age of the firm). The results should not be generalized, since the sample was based on large French companies
for 2010–2015.
Practical implications – France is a highly regulated context that places considerable pressure on French
firms in terms of CSR policies. The French Parliament has adopted several laws requiring transparency in the
environmental, social, and corporate governance policies of French firms. In this context, firms often regard
CSR policies as constraints rather than opportunities. This study highlights the benefits that result from
transparent CSR practices. More precisely, it provides evidence that the high disclosure of ESG information is
a pull factor for credit providers.
Originality/value – This study extends the scope of previous studies by examining the value and relevance
of CSR disclosures in financing decisions. More precisely, it focuses on the relatively little explored
relationship between the extent of CSR disclosures and access to debt financing. This paper demonstrates
how each category of CSR disclosure information (e.g. social, environmental and governance) affects access to
debt financing. Moreover, this study focuses on the rather interesting empirical setting of France, which is
characterized by its highly developed legal reforms in terms of CSR. Achieving a better understanding of the
effects of ESG information is useful for corporate managers desiring to meet lenders’ expectations and attract
debt financing sources.
Keywords Disclosure, Debt financing, Leverage, Corporate social responsability
Paper type Research paper

1. Introduction
Interest in corporate social responsibility (CSR) is growing in both academic research and the
Journal of Applied Accounting
Research business world. Firms consider social responsibility to be a duty in terms of acting
Vol. 20 No. 4, 2019
pp. 394-415
responsibly toward their stakeholders and CSR reporting to be a response to stakeholder
© Emerald Publishing Limited
0967-5426
expectations and requirements (Kotonen, 2009). Numerous firms worldwide have undertaken
DOI 10.1108/JAAR-01-2018-0020 serious efforts to integrate CSR into various aspects of their businesses ( Jo and Harjoto, 2011).
The United Nations (2016)[1] finds that an overwhelming number of CEOs prioritize CSR disclosure
sustainability, and 97 percent believe that it is important to the future success of their and debt
business. This is supported in the US context as more than half of the Fortune 1000 companies financing
regularly issue CSR reports, and approximately 10 percent of US investments are screened to
ensure that they meet CSR-related criteria (Galema et al., 2008; El Ghoul et al., 2011).
France is among the countries that are most committed to CSR at the European and
international levels. In 2001, the French Parliament adopted several laws designed to 395
encourage CSR and socially responsible investments within the private sector (The report of
Ministry of Foreign Affairs, 2012). Among these, the New Economic Regulations required
nearly 700 publicly listed companies to report almost 60 indicators related to their CSR
engagement in their annual reports. The aim was to compel publicly listed French companies
to report information to their stakeholders regarding the measures taken to account for the
environmental and social impacts of their activities[2]. In 2008, France initiated special policies
to address this issue. In fact, during the French presidency of the EU[3], France invited the
European Commission to begin work on a European policy in this field, taking inspiration
from French legislation adopted in 2001. In this way, France played a key role in the adoption
of Directive 2014/95/EU of October 22 2014, which obliges certain large undertakings and
groups to disclose non-financial information. The directive was transposed into French law on
July 21, 2017 (The report of Ministry of Foreign Affairs, 2017, p. 2)[4].
More recently, the Grenelle Acts, which were adopted by the French Parliament in 2009 and
2010, require all large companies operating in France to produce an annual CSR report. In 2015,
KPMG’s global survey on CSR reporting revealed that France leads the world in third-party
verified corporate responsibility reporting with 96 percent of firms reporting annually[5].
The prior literature highlights several arguments (ethical, legal, sustainability and
reputation-based) that support the implementation of CSR policies by firms. Superior CSR
performance ensures that firms maintain their ethical standards, which efficiently curbs
opportunistic behavior (Benabou and Tirole, 2010; Eccles et al., 2012) and enhances
stakeholder engagement (Benabou and Tirole, 2010; Eccles et al., 2012; Cheng et al., 2014).
This reduces agency costs ( Jones, 1995) and increases firm performance ( Jo and Harjoto,
2011; Lins et al., 2017; Bose et al., 2017; Servaes and Tamayo, 2013[6]). An important feature
of CSR reporting is that it likely reduces the information asymmetry in the market (Dhaliwal
et al., 2011; Bose et al., 2017) and signals firms’ long-term perspectives (Menz, 2010; Cheng
et al., 2014). This creates a positive feedback loop and improves the transparency around the
social and environmental impacts of companies’ activities (Cheng et al., 2014). In the same
vein, Sharfman and Fernando (2008) and El Ghoul et al. (2011) show that high CSR
performance decreases the costs of capital because of the reduction of a firm’s risk and the
enlargement of a firm’s investor base. More recently, Cho et al. (2012) find that CSR
performance improves market liquidity and decreases bid-ask spreads. In addition, some
studies suggest that superior CSR performance provides better access to valuable resources
(Cochran and Wood, 1984; Waddock and Graves, 1997; Branco and Rodriguez, 2006). It also
provides competitive advantages (Hart, 1995; Porter and Linde, 1995; Russo and Fouts,
1997; Saeidi et al., 2015) by increasing innovation capacity (Asongu, 2007; Perrine, 2012;
Rexhepi et al., 2013; Martinez-Conesa et al., 2017), attracting higher quality employees
(Greening and Turban, 2000; Coldwell et al., 2008; Young and Thyil, 2009; Jones et al., 2013)
and enhancing the social legitimacy of the firm (Cho and Patten, 2007; Kuo and Chen, 2013;
Chauvey et al., 2015; Mathuva et al., 2017).
There are many aspects of a firm’s social responsibility, such as the performance of its
internal management purpose and external disclosure. Ullmann (1985), among others,
distinguishes between social performance and social disclosure. According to the author,
“social performance refers to the extent to which an organization meets the needs,
expectations, and demands of certain external constituencies beyond those directly linked to
JAAR the company’s products, markets” (Ullmann, 1985, p. 543). When a firm improves the control
20,4 of natural resources and avoids environmental damage, it meets the anticipated and existing
social demands. An organization’s social performance is an indistinguishable component of its
effectiveness (Strand, 1983). Nevertheless, social disclosure refers to the quantity and quality
of the social responsibility information that is disclosed, such as pollution disclosures in
annual reports (Ullmann, 1985). The main question regarding CSR disclosures concerns the
396 information content of corporate disclosures for stakeholders, especially investors. Our study
focuses on the disclosure of CSR information. While there is an abundance of research related
to the effects of firms’ CSR performance, the empirical studies related to the relevance of CSR
disclosure are relatively restricted, particularly with regard to financing decisions. The
majority of these studies analyze CSR disclosure from investors’ perspectives[7]. This study
fills this gap and extends the scope of previous research. It addresses the following research
question: does the extent of the environmental, social and governance information (ESG) that
is disclosed by French companies affect their access to debt financing? Studying this issue
results in two significant contributions. First, this study is among a limited number of studies
that focus on the relevance of CSR disclosures for credit providers because, similar to
investors, they play a major role in terms of a firm’s sustainability. Indeed, it examines how
lenders perceive and “reward” the volume of ESG information that is disclosed by firms.
Second, previous studies usually focus on one dimension of CSR disclosure in major cases of
environmental disclosures (Sharfman and Fernando, 2008; Cho et al., 2012; Kuo and Chen,
2013; Matsumura et al., 2014; Passetti et al., 2018).
This study analyzes the relevance of the three dimensions of CSR disclosures: ESG. It is
important to consider all three dimensions because lender expectations may differ for each
dimension. Achieving a better understanding of the effects of CSR disclosure is useful for
corporate managers wishing to meet lenders’ expectations and attract debt financing
sources. Finally, this study focuses on the rather interesting empirical setting of France,
which is characterized by its highly developed legal reforms in terms of CSR.
The remainder of this paper is organized as follows. The next section reviews the literature
and presents the development of the hypothesis. The third section outlines the sample,
describes the data and presents the methodology. The fourth section reports and discusses the
main findings. The fifth section provides the conclusion.

2. Theoretical background and hypothesis development

The prior literature argues that engagement in CSR activities has proven to have certain
benefits ranging from better financial performance ( Jo and Harjoto, 2011; Lins et al., 2017;
Bose et al., 2017; Servaes and Tamayo, 2013) to more unforeseen opportunities (Fombrun
et al., 2000). Firms with high CSR performance experience better access to valuable
resources (Cochran and Wood, 1984; Waddock and Graves, 1997; Branco and Rodrigues,
2006), attract more qualified employees (Greening and Turban, 2000; Coldwell et al., 2008;
Young and Thyil, 2009; Jones et al., 2013), better market their products and services
(Moskowitz, 1972; Fombrun, 1996; Greening and Turban, 2000; Luo and Bhattacharya,
2006), and demonstrate higher innovation capacities relative to firms with low CSR
performance (Asongu, 2007; Perrine, 2012; Rexhepi et al., 2013; Martinez-Conesa et al., 2017).
Even though they are two distinct aspects, CSR disclosure and CSR performance are
highly related. As the literature review has demonstrated, over the years, in the most cases,
firms with high CSR performance are more likely to disclose extensive CSR information
(Van Staden and Hooks, 2007; Dhaliwal et al., 2011). However, there is no unanimous
position in the literature regarding this relation. Some researchers question the relevance of
CSR disclosure (Elijido-Ten et al., 2010; Clarkson et al., 2011). Taking the concept of
greenwashing as the theoretical basis of their studies, they argue that CSR disclosures are
used as “window dressing” to “appear” socially responsible and improve firm image but
they do not any effective activities. Firms choose to disclose positive information about their CSR disclosure
environmental or social performance without fully disclosing negative information on these and debt
dimensions in order to create an overly positive corporate image (Lyon and Maxwell, 2011). financing
Consistent with Dhaliwal et al. (2014), we argue that CSR disclosure may deliver relevant
non-financial information that is not reported in financial statements but reflects proper CSR
performance and convinces funding providers of the firm’s sustainability. This may attract
fund providers and facilitate access to debt financing. 397
The relationship between CSR disclosures and capital structures has been the subject of
few studies. The academic literature primarily addresses this issue using the legitimacy
theory (Lindblom, 1994; Suchman, 1995), institutional theory (DiMaggio and Powell, 1983;
Meyer and Rowan, 1977), stakeholder theory (Clarkson, 1995; Freeman, 1984), resource
dependence theory (Pfeffer and Salancik, 1978, 2003), agency theory ( Jensen and Meckling,
1976) and signaling theory (Spence, 1973).
The legitimacy theory (Lindblom, 1994; Suchman, 1995) states that organizations as
whole (e.g. corporations) undertake CSR activities in order to meet social expectations and
gain the acceptance of society. From this perspective, CSR disclosure is used as a
legitimation tool (Chen and Roberts, 2010). In other words, firms disclose social and
environmental information in order to improve their reputation and gain the acceptance of
society. CSR disclosures enhance the social legitimacy of the firm (Cho and Patten, 2007; Kuo
and Chen, 2013; Chauvey et al., 2015; Mathuva et al., 2017). Similar to the legitimacy theory,
the institutional theory (DiMaggio and Powell, 1983; Meyer and Rowan, 1977) attempts to
explain the relationship between a firm and its environment. According to this approach,
firms comply with institutional norms and rules in order to improve their stability and
enhance their survival prospects (Chen and Roberts, 2010). Therefore, firms disclose social
and environmental information in order to address institutional pressure (Levy et al., 2010).
However, the stakeholder theory (Clarkson, 1995; Freeman, 1984) is one of the most
commonly cited theories within social and environmental accounting studies. It is also
concerned with the relationship between a firm and its environment with a focus on its
various stakeholders. This approach states that the main challenge of a firm is to meet the
conflicting expectations of different stakeholders, inter alia, in terms of ESG information in
order to gain their support (Neu et al., 1998; Chen and Roberts, 2010). Through CSR
disclosures, firms could provide users with extrafinancial information that helps in decision
making, and, subsequently, satisfies the social interests of their stakeholders (including
credit providers). It is vital for firm to obtain support from its lenders in order to access to
debt financing. The resource dependence theory (Pfeffer and Salancik, 1978, 2003) focuses
on the business’s ability to obtain relevant resources. According to this approach, a firm is
not self-sufficient and needs external resources for its survival and growth. CSR disclosures
are likely to help company access financing (Dhaliwal et al., 2011; Michaels and Grüning,
2017; Yang et al., 2018). Managers would explain and justify the social and environmental
impacts of their activities to funds providers (including credit providers) from the
perspective of having better access to financing sources (including debt). Hence, firms that
disclose extensive environmental and social information are likely to meet the expectations
of credit providers, gain their support and obtain better access to debt financing sources.
The agency theory, as discussed by Jensen and Meckling (1976), is a theoretical
framework for linking CSR disclosure to debt financing. The agency theory suggests that
managers will make a set of decisions to maximize their own interests, especially in the
presence of information asymmetry. In this context, CSR disclosures may play a monitoring
role by reducing information asymmetry and agency problems (Cerbioni and Parbonetti,
2007). Prior studies suggest that, when compared to firms that adopted no CSR policy, firms
that voluntarily adopt CSR policies demonstrate less opportunistic behavior (Benabou and
Tirole, 2010; Eccles et al., 2012[8]) and more stakeholder engagement (Cheng et al., 2014).
JAAR Subsequently, they have lower contracting costs ( Jones, 1995) and better relations with their
20,4 key stakeholders (Waddock and Graves, 1997). In this context, CSR disclosures are likely to
enhance the trust between the firm and its stakeholders, including inter alia, its lenders. The
latter may reward this by allowing firms with high CSR disclosure scores to have greater
access to debt financing sources.
Based on the signaling theory (Spence, 1973), CSR reporting is likely to send a
398 certification signal to the market (Chan et al., 2017). Some studies demonstrate that CSR
disclosure mitigates the adverse selection problem between firms and stakeholders and
improves the transparency around the social and environmental impact of companies, along
with their governance structures (Dhaliwal et al., 2011; Cho et al., 2013; Cheng et al., 2014).
Spence (1973) and Benabou and Tirole (2010) suggest that CSR reporting signals the long-
term perspectives of socially responsible firms[9] and differentiates them from their socially
irresponsible counterparts.
Regarding the empirical studies, Dhaliwal et al. (2011) demonstrate that CSR disclosure
plays a significant role in improving the information environment. They emphasize that the
publication of a CSR report, coupled with a good CSR performance, allows analysts to better
predict firms’ future earnings and reduces the errors in their forecasts. Cormier and Magnan
(2014) confirm the findings of Dhaliwal et al. (2011). They conclude that CSR disclosure
improves financial analysts’ information environment, which translates into a tighter
consensus in earnings forecasts and less dispersion. Maaloul et al. (2016) demonstrate that
increased intangible disclosures affect the accuracy and dispersion of analysts’ earnings
forecasts. However, according to the researchers, this effect varies according to the nature of
the intangible assets.
Regarding the capital structure, Cheng et al. (2014), among others, demonstrate that
transparency around CSR performance affects financing decisions by reducing capital
constraints. In fact, the increased availability and quality of CSR information reduces the
information asymmetry between a firm and its investors (Hail and Leuz, 2006; Chen et al.,
2009; El Ghoul et al., 2011), thereby leading to lower equity costs (Dhaliwal et al., 2011;
El Ghoul et al., 2011) and lower capital constraints (Hubbard, 1998; Cheng et al., 2014).
To reveal how credit providers view the existence of CSR strategies, Yang et al. (2018)
investigate the effects of CSR on the information asymmetry between firms and their
lenders. Their empirical findings show that firms that employ CSR strategies possess higher
leverage than firms that do not. They find that CSR reports provide long-term predictions to
credit providers, thereby enabling the firms that issue them to maintain higher long-term
leverage when compared with firms that do not incorporate CSR into their operations. The
authors conclude that CSR can considerably reduce the information asymmetry between
firms and credit providers. Ge and Liu (2015) demonstrate that CSR strengths and concerns
are considered by bondholders. More recently, Lins et al. (2017) find that firms with high
CSR ratings[10] experience higher profitability, growth and sales per employee relative to
firms with low CSR ratings – and they raise more debt. Based on a panel of American firms,
Erragragui (2018) confirms that environmental and governance strengths reduce firms’ debt
costs, as demonstrated in prior studies.
If CSR reporting is considered as a sign of stakeholders’ benefits, then the active
reporting of CSR information can reduce the adverse selection problems between firms and
credit providers and improve the credibility and the trust in the former. The information
that is disclosed by a firm can affect its lenders’ perceptions of the actual situation therein
and of its future expectations (García-Sánchez and Noguera-Gámez, 2017). Therefore, a
good-quality CSR disclosure would improve a firm’s access to debt financing sources since
performing CSR entails a capital injection (Chan et al., 2017).
Another important feature is that CSR reporting is likely to have a negative impact on
firm risks. In fact, a growing number of empirical studies find that firms that make
extensive CSR disclosures have lower total and idiosyncratic risks (Benlemlih et al., 2016). In CSR disclosure
addition, CSR disclosure enhances firm value (Cahan et al., 2016; Gutsche et al., 2016) and and debt
increases its financial performance (Platonova et al., 2016). More recently, Zhong and Gao financing
(2017) find a positive relation between CSR disclosure and investment efficiency. This
relation is stronger for firms with lower financial reporting quality. According to the
authors, CSR disclosure contributes to reducing information asymmetry and increasing
investment efficiency. 399
The relevant literature advances several arguments that explain why CSR disclosure
could positively affect a firm’s access to debt financing. However, some studies document a
negative effect of CSR on access to debt financing, which is translated into higher debt costs
(Chava, 2014; Goss and Roberts, 2011; Magnanelli and Izzo, 2017). According to Chava (2014,
p. 3), “some lenders could refrain from lending to a firm based on its environmental profile,
either for social responsibility considerations or to avoid the potential lender liability and
reputation risk.” Magnanelli and Izzo (2017) suggest that banks consider CSR activities as a
costly diversion of firm resources. Goss and Roberts (2011) document mixed reactions of
lenders to CSR investments. They provide evidence that lenders require higher debt costs
for low-quality borrowers that engage in discretionary CSR spending, but they are
indifferent to CSR investments by high-quality borrowers.
In the light of previous literature, we argue that it could be possible that lenders are
sensitive to CSR disclosures since the disclosures include relevant non-financial information
that is not reported in corporate financial statements but may be useful for the assessment
of firm’s risks and/or value. However, the theoretical debate is still unresolved. Various
theories have been proposed to explain firms’ CSR practices. The selection and application
of these theories should depend upon the focus of the study. The legitimacy theory,
stakeholder theory, agency theory and signaling theory appear to be relevant for studying
the relation between CSR disclosures and access to debt financing. From this perspective,
we do not predict the signs for the CSR information categories (social, environmental and
governance) and we hypothesize the following:
H1. There is a relationship between leverage ratios and CSR disclosure scores.

3. Data and sample

3.1 Sample selection and data sources
The initial sample consists of all French listed firms belonging to the SBF 120 index from
2010 to 2015. The SBF 120 index comprises the 120 largest capitalizations and the most
liquid French stocks that are traded on the Paris Stock Exchange. As in prior studies,
regulated utilities (Standard Industrial Classification, or SIC, codes 4900–4999) and financial
firms (SIC codes 6000–6999) are excluded because of their specific disclosure practices,
accounting rules, and financing policies. All firms with missing data are also discarded.
Ultimately, a final sample of 80 firms is obtained for the years 2010–2015.
To construct the sample, information is gathered on firms’ CSR disclosure ratings from the
Bloomberg database, which has been used in numerous studies examining the effects of CSR
disclosure (Giannarakis, 2014; Gutsche et al., 2016; Dardour and Husser, 2016). As Bloomberg
describes it, this database provides ESG data on more than 11,000 companies with over 700
ESG indicators from company-sourced filings and third-party information, covering virtually
the entire publicly investable universe. The CSR scores were obtained from firms’ voluntary
responses to a survey organized by Bloomberg containing ESG dimensions (Dardour and
Husser, 2016). Therefore, this study is a mixture of mandated and voluntary CSR disclosures.
Based to Cho et al. (2012), we design all of these disclosures as voluntary.
The secondary sources concern financial and accounting data. These are primarily
collected from the Thomson One Banker and Datastream databases.
JAAR 3.2 Variable measurements
20,4 As suggested by Gebauer and Hoffmann (2009), the evaluation of CSR reports makes
companies’ sustainability reporting practices comparable and publicly transparent. In order
to assess the quality of the CSR disclosures of French companies, the CSR scores from the
Bloomberg database are used. These scores measure the extent of large publicly traded
companies’ ESG disclosures. They range from zero to 100 and assess the level of a firm’s
400 transparency in terms of extrafinancial performance. Companies that disclose little ESG
information score low, while companies that disclose extensively score high.
In the first step, the relationship between leverage ratios and CSR disclosure is studied
using two measures, namely, total debt over total assets and long-term debt to total assets. In
the second step, the relationships between CSR disclosure and each debt category are
examined using the natural logarithms of the total, long-term and short-term debt, respectively.
To better isolate the effects of CSR disclosures on debt financing, a host of firm-specific
characteristics are included based on previous studies (Cheng et al., 2014; Yang et al., 2018),
including Tobin’s Q, sales growth and profitability, in each of the regressions. Tobin’s Q is
the ratio of the market value of equity plus total liabilities to total assets. Annual sales
growth is measured by the percentage of sales growth from year n−1 to year n. Firm
profitability is the return on assets (ROA) ratio.

3.3 Models
To investigate the effects of ESG scores on firm access to debt financing sources, the
following panel data model is used:


Debtfinancingi;t ¼ f CSR disclosurei;t ; Control variablesi;t þei;t :

To determine the appropriate econometric estimation method, some statistical tests are
conducted. First, the Hausman specification test is conducted, which is the classical test of
whether fixed or random effects models should be used for the panel data. The results show
that the random effects model is more relevant than the fixed effects model ( p W5 percent).
Second, tests of the heteroskedasticity and autocorrelation of errors are conducted in order
to verify the absence of bias, which may affect the significance of the coefficients. Therefore,
the Breusch–Pagan Lagrange multiplier test is applied to detect any possible
heteroskedasticity. The results indicate that the structure of the errors among the panels
is heteroskedastic ( p o5 percent). In addition, the Wooldridge test demonstrates the
existence of a first-order autocorrelation of the errors. This study uses the feasible
generalized least-squares (FGLS) method, which ameliorates heteroskedasticity and
autocorrelation problems across panels.

4. Empirical results
4.1 Descriptive statistics
Table I reports the descriptive statistics of the dependent and independent variables that are
used to study the relationship between CSR disclosure and debt. The average leverage ratio
is 25.8095 percent with a standard deviation of 14.6029, thus indicating a wide divergence in
the capital structures of the SBF 120 companies. The mean of long-term debt is 7.2462,
whereas the mean of short-term debt is 5.9383. This supports the findings of Yang et al.
(2018), suggesting that the firms tend to maintain a term structure with high long-term debt
and low short-term debt.
On average, the social, environmental and governance disclosure scores are equal to
47.4844, 37.1067 and 58.25, respectively. The SBF 120 firms seem to perform slightly better
in the corporate governance and social dimensions than the environmental dimension. The
mean value of the overall ESG score is 42.8183 with a standard deviation of 13.2318, thus
Variables Meanings Mean SD Q25 Q50 Q75
CSR disclosure
and debt
Debt financing Dependent variables financing
DTA_Ratio Total leverage ratio 25.8095 14.6029 15.1139 24.7919 37.1492
LTD_Ratio Long-term leverage ratio 20.1623 13.4515 10.3905 18.5166 28.7907
LnTD The natural logarithm of total debt 7.6230 1.9300 6.7539 7.76035 8.9886
LnLTD The natural logarithm of long-term debt 7.2462 2.1174 6.4154 7.4674 8.7688
LnSTD The natural logarithm of short-term debt 5.9383 2.0248 4.6643 6.0257 7.3355 401
CSR disclosure Independent variables
ESG_Score Environmental, social and governance 42.8183 13.2318 35.3306 45.4545 52.8926
disclosure score
SOC_Score Social disclosure score 47.4844 14.3457 38.5965 49.1228 57.8947
ENV_Score Environmental disclosure score 37.1067 13.2290 27.907 37.8294 46.5116
GOV_Score Governance disclosure score 58.2500 9.2478 51.7857 57.1429 66.0714
Control variables
QTobin Tobin’s Q 1.4179 0.81300 1.0318 1.1873 1.5558
Sales Growth Annual sales growth 6.8166 11.0175 0.5013 5.1985 11.5792 Table I.
ROA Return on assets ratio 4.8093 4.3738 2.7156 4.4735 6.8287 Descriptive statistics

implying significant variation with this score as well. CSR disclosure and capital structures
vary significantly between French firms. There is enough variation within the sample to
conduct a meaningful analysis of the relationship between CSR disclosure and access
to debt financing sources.
The control variables also offer a wide range of values. Tobin’s Q, sales growth and ROA
have mean values of 1.4179, 6.8166 and 4.8093, respectively, with standard deviations of
0.8130, 11.0175 and 4.3738, respectively.

4.2 Pearson correlation matrix

Table II presents the Pearson correlation between the variables that are included in the
regression models. It shows positive and statistically significant correlations between the
CSR disclosure scores and the natural logarithms of the total, long-term and short-term debt,
respectively. These findings suggest that firms with higher CSR disclosure scores are more
capable of obtaining debt financing because of the greater transparency of their social,
environmental and corporate governance practices.
Overall, the correlation coefficients, with the exception of those of the debt proxies, are lower
than the threshold of 0.8 specified by Kennedy (1985) and Gujarati (1988), thus reflecting the
absence of serious multicollinearity problems in the regression analyses that were performed.

4.3 Regression results

As discussed in the introduction, despite increased academic interest in CSR policies, very
little is known about how CSR disclosure affects access to debt financing. The purpose of this
study is to address this gap in the literature by empirically examining the link between firms’
CSR disclosure scores and their leverage ratios. First, this study conducts a multivariate
regression analysis in which firms’ total and long-term leverage ratios are regressed on the
overall ESG disclosure scores and control variables. Second, the effect of each CSR dimension
(social, environmental and governance) on these ratios is examined. Then, the focus shifts to
the effects of CSR disclosure on the levels of each debt category (total, long-term and
short-term) and each debt measure is regressed on the ESG scores and control variables.
Table III presents the empirical results of the relationship between the overall ESG,
social, environmental and governance disclosure scores and the total and long-term leverage
ratios, respectively. It shows positive and statistically significant relationships between the
 20,4

402
JAAR

Table II.

coefficients
Pearson correlation
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

(1) Ln_TD 1.00

(2) DTA_Ratio 0.5709*** 1.00
(3) Ln_LTD 0.9660*** 0.5904*** 1.00
(4) LTD_Ratio 0.4736*** 0.9147*** 0.5525*** 1.00
(5) Ln_STD 0.8535** 0.3158** 0.7453*** 0.1032** 1.00
(6) SOC_Score 0.2599*** 0.0252 0.2772*** 0.0046 0.2941*** 1.00
(7) ENV_Score 0.3529*** −0.0340 0.3349*** −0.0582 0.3718*** 0.5585*** 1.00
(8) GOV_Score 0.3484*** 0.0604 0.3526*** 0.0528 0.3001*** 0.4830*** 0.4678*** 1.00
(9) ESG_Score 0.4088*** 0.0064 0.3998*** −0.0187 0.4076*** 0.6507*** 0.7969*** 0.6996*** 1.00
(10) QTobin −0.3915*** −0.2797*** −0.3961*** −0.2132*** −0.3469*** −0.1265*** −0.1208*** −0.0863* −0.0999** 1.00
(11) Sales Growth −0.1503*** −0.0780* −0.1426*** −0.0672 −0.1409*** −0.1558* −0.1583*** −0.2198*** −0.2722*** 0.1788*** 1.00
(12) ROA −0.3914*** −0.3036*** −0.3816*** −0.2241*** −0.3440*** −0.2210** −0.1587*** −0.1624*** −0.1828*** 0.5713*** 0.2431*** 1.00
Notes: Ln_TD is the natural logarithm of total debt; DTA_Ratio is total leverage ratio measured by total debt over total assets; Ln_LTD is the natural logarithm of long-
term debt; LTD_Ratio is long-term leverage ratio measured by long-term debt over total assets; Ln_STD is the natural logarithm of short-term debt; SOC_Score is social
disclosure score retrieved the Bloomberg database; ENV_Score is environmental disclosure score retrieved from the Bloomberg database; GOV_Score is governance
disclosure score retrieved from the Bloomberg database; ESG_Score is environmental, social and governance disclosure score retrieved from the Bloomberg database;
QTobin is Tobin’s Q, which is the ratio of market value of equity plus total liabilities to total assets; Sales Growth is annual sales growth measured by the percentage of
sales growth from year n−1 to year n; ROA is firm profitability measured by the return on assets ratio. *,**,***Significant at 0.10, 0.05 and 0.01 levels, respectively
 Feasible generalized least-squares
DTA_Ratio LTD_Ratio

ESG_Score 0.0207 (0.83) – – 0.0465 (1.63) – –

SOC_Score – 0.0565** (2.25) – – 0.0741** (2.93) –
ENV_Score – – −0.0091 (−0.33) – – – 0.0152 (0.56) –
GOV_Score – – – 0.0015 (0.07) – – – 0.0793** (2.55)
Tobin_Q −3.3815*** (−6.24) −3.1900*** (−5.76) −3.2627*** (−5.85) −3.2729*** (−5.84) −2.3923*** (−4.57) −2.2321*** (−4.30) −2.4088*** (−4.56) −2.3484*** (−4.45)
Sales Growth 0.0006 (0.03) −0.0004 (−0.03) −0.0009 (−0.06) −0.0009 (−0.05) −0.0026 (−0.13) −0.0037 (−0.18) −0.0055 (−0.27) −0.0017 (−0.09)
ROA −0.1109 (−1.61) −0.1021 (−1.55) −0.1075 (−1.63) −0.1084 (−1.63) −0.0004 (−0.01) 0.0005 (0.01) −0.0045 (−0.07) 0.0041 (0.06)
Intercept 29.7149*** (20.89) 27.5961*** (17.41) 30.7216*** (21.32) 30.2824*** (18.91) 20.3192*** (12.70) 18.5732*** (11.75) 21.8145*** (15.55) 17.5608*** (8.35)
No. of
observations 478 478 478 478 478 478 478 478
Wald χ2 53.54 52.25 45.80 45.86 26.62 31.36 23.90 28.78
2
Prob Wald χ 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Notes: DTA_Ratio is total leverage ratio measured by total debt over total assets; LTD_Ratio is long-term leverage ratio measured by long-term debt over total assets; SOC_Score is
social disclosure score retrieved the Bloomberg database; ENV_Score is environmental disclosure score retrieved from the Bloomberg database; GOV_Score is governance disclosure
score retrieved from the Bloomberg database; ESG_Score is environmental, social and governance disclosure score retrieved from the Bloomberg database; QTobin is Tobin’s Q,
which is the ratio of market value of equity plus total liabilities to total assets; Sales Growth is annual sales growth measured by the percentage of sales growth from year n−1 to year
n; ROA is firm profitability measured by the return on assets ratio. **,***Significant at 0.05 and 0.01 levels, respectively
financing
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and debt

403

using leverage ratios

as dependent variable
Regression results
Table III.
JAAR social disclosure score (SOC_score) and the two proxies for the leverage ratio. This result is
20,4 consistent with the study of Yang et al. (2018), which documented a positive relation
between CSR disclosure and access to debt. Many reasons could explain this finding. First,
firms divulging information about their social engagement send a signal that transmits their
long-term perspectives (Menz, 2010) and their ethical convictions.
This leads to lenders’ positive perceptions of social reporting as indicative of the
404 long-term sustainability of firms’ financial performance rather than their short-term
performance (Yang et al., 2018). Second, consistent with the legitimacy theory, the extent of the
social information disclosed by French firms is likely to improve their legitimacy and
reputation, which subsequently facilitates their access to debt financing. In addition,
consistent with the stakeholder theory, French firms that disclose social information are likely
to meet the expectations of their credit providers in terms of extrafinancial information. Such
firms may have more support and more creditor trust, and, consequently, could obtain
preferential treatment from banks through better access to debt financing sources.
The governance disclosure score (GOV_Score) has a statistically significant coefficient only
for the long-term leverage ratio. This suggests that French firms that disclose a high volume of
governance information are more able to access long-term debt financing. Given that the
disclosure of information on corporate governance reveals details about the control
mechanisms that are adopted within a firm, it allows the information asymmetries between
internal and external partners to be reduced (Cormier and Magnan, 2014; Hamrouni et al.,
2017). Thus, firms that disclose more information pertaining to their governance systems
receive better treatment by lenders through gaining more access to long-term debt. In addition,
to grant long-term loans, credit providers commonly need to ensure the firm’s sustainability
and long-term perspectives. The disclosure of corporate governance indicators can provide
them with such information; consequently, this can encourage banks to make long-term debt
financing more accessible to firms with better corporate governance disclosures.
According to Table III, there is no significant relation between the ESG score and the total
and long-term leverage ratios, respectively. The overall CSR disclosure is a combination of
ESG information and the lenders’ sensitivity differs according to the type of CSR information.
As a result, this might have caused the insignificant effect of the ESG variable on leverage
ratios. The findings of Table III show that the social disclosures are what matter to lenders.
Table IV displays the results of the panel regressions on the relationships between these
CSR disclosure scores and the natural logarithms of the total (Ln_TD), long-term (Ln_LTD)
and short-term (Ln_STD) debt. The empirical results shown in Table IV are in line with
those presented in Table III. Overall, the regression coefficients of Ln_TD, Ln_LTD and
Ln_STD are positive and statistically significant at the 1 percent level, suggesting that firms
with higher social disclosure scores are more capable of obtaining debt financing. Moreover,
Table IV shows that the environmental information disclosed by French companies has a
significant positive influence on the natural logarithms of the total (Ln_TD), long-term
(Ln_LTD) and short-term (Ln_STD) debt, respectively. This suggests that firms disclosing
more environmental information have better access to debt financing. The findings can be
attributed to the effects of environmental disclosure on both firms’ risk and information
asymmetry. First, as credit risk is affected by environmental risk (Mengze and Wei, 2015),
lenders place increasing importance on the environmental risk in credit management
(Thompson and Cowton, 2004; Weber, 2012). Hence, they incorporate environmental
information into their corporate lending decisions. The findings are consistent with those of
Thompson and Cowton (2004), reflecting the importance of environmental information for
lenders. Second, environmental disclosures include relevant indicators that are likely to
reduce doubt among lenders (particularly the sensitivity to environmental issues) and
convince them that environmental activities are not costly diversions of firm resources.
Hence, lenders may have favorable perceptions to firms that publicly disclose
 Feasible generalized least squares
Ln_TD Ln_LTD
ESG_Score 0.0008 (0.49) – – 0.0285*** (10.25) – –
SOC_Score – 0.0093*** (4.54) – – – 0.0171*** (6.33) – –
ENV_Score – – 0.0188*** (8.17) – – – 0.0254*** (9.50) –
GOV_Score – – – −0.0023 (−1.23) – – – 0.0228*** (6.09)
Tobin_Q −0.2739*** (−6.10) −0.4639*** (−8.06) −0.5448*** (−10.49) −0.2633*** (−5.83) −0.5993*** (−9.18) −0.4670*** (−6.43) −0.5700*** (−8.67) −0.5406*** (−7.84)
Sales Growth −0.0007 (−0.73) −0.0016 (−1.19) −0.0009 (−0.61) −0.0006 (−0.64) −0.0004 (−0.22) −0.0016 (−0.94) −0.0012 (−0.70) −0.0025 (−1.21)
ROA −0.0043 (−1.10) −0.0091** (−2.01) −0.0104** (−2.20) −0.0038 (−1.01) −0.0060 (−1.08) −0.0011 (−0.21) −0.0040 (−0.70) −0.0088 (−1.31)
Intercept −1.7683*** (−6.92) 8.0480*** (60.23) 7.8927*** (67.62) −1.8206*** (−6.94) 7.2300*** (46.11) 7.3969*** (44.06) 7.3866*** (53.21) 7.008*** (27.90)
No. of
observations 478 478 478 478 478 478 478 478
Wald χ2 247.15 98.07 184.25 249.04 189.46 83.86 165.37 120.02
Prob Wald χ2 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Feasible generalized least squares
Ln_STD
ESG_Score 0.0257*** (6.69) – – –
SOC_Score – 0.0134*** (3.59) – –
ENV_Score – – 0.0190*** (4.87) –
GOV_Score – – – 0.0024 (0.36)
Tobin_Q −0.6510*** (−6.62) −0.6435*** (−6.63) −0.6256*** (−6.33) −0.0684 (−0.44)
Sales Growth −0.0036 (−1.35) −0.0043 (−1.60) −0.0040 (−1.52) 0.0010 (0.30)
ROA −0.0266** (−2.76) −0.0255** (−2.61) −0.0288** (2.91) −0.0301** (−2.58)
Intercept 6.147*** (28.11) 6.6173*** (29.02) 6.5238*** (30.67) 6.0309*** (14.37)
No. of
observations 478 478 478 478
Wald χ2 111.28 83.04 89.40 83.22
Prob Wald χ2 0.0000 0.0000 0.0000 0.0000
Notes: Ln_TD is the natural logarithm of total debt; Ln_LTD is the natural logarithm of long-term debt; Ln_STD is the natural logarithm of short-term debt; SOC_Score is social
disclosure score retrieved the Bloomberg database; ENV_Score is environmental disclosure score retrieved from the Bloomberg database; GOV_Score is governance disclosure score
retrieved from the Bloomberg database; ESG_Score is environmental, social and governance disclosure score retrieved from the Bloomberg database; QTobin is Tobin’s Q, which is the
ratio of market value of equity plus total liabilities to total assets; Sales Growth is annual sales growth measured by the percentage of sales growth from year n−1 to year n; ROA is firm
profitability measured by the return on assets ratio. **,***Significant at 0.05 and 0.01 levels, respectively
financing
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and debt

405

logarithm of total,
Table IV.

long-term and short-

term debts,
using as dependent
Regression results

respectively
variables the natural
JAAR environmental information. These findings are consistent with those of Jung et al. (2018) and
20,4 Kleimeier and Viehs (2016), suggesting that firms that disclose environmental information
enjoy better lending conditions.
Therefore, the ESG score has a significant positive influence on long-term and short-term
debt. The governance disclosure score (GOV_Score) has a statistically significant and positive
coefficient only for the long-term debt. A firm disclosing extensive information about their
406 corporate governance practices is perceived as more transparent and trustworthy by long-
term credit providers. High governance disclosures are perceived by credit providers as a
signal of the long-term perspectives of socially responsible French firms.
The findings of Tables III and IV regarding the effect of ESG, environmental and
governance disclosures are not inclusive. They partially corroborate the predicted hypothesis
and lead us to conclude that social disclosures matter to lenders. Overall, the results can be
explained by the reduction of the information asymmetry and the improvement of the
transparency around the CSR activities for French companies that disclose a high level of ESG
information. French firms disclosing a high volume of ESG information provide lenders with
relevant extrafinancial indicators that are not reported in financial statements but are useful
for the assessment of firm risks and/or value. The firms that satisfy credit providers’
expectations for extrafinancial information may experience better treatment by banks.
Therefore, better access to debt financing sources is an important channel through which
credit providers “reward” more transparent firms. These results lead to the conclusion that the
disclosure of extrafinancial information, such as CSR indicators, is a pull factor for lenders.
With regard to the control variables, Tobin’s Q ratio and ROA display negative and
statistically significant regression coefficients. These findings are consistent with the
pecking order theory, suggesting that firms with high profitability and high opportunity
growth prefer to use internal sources of financing and are thus less dependent on debt.

4.4 Robustness tests

According to Beck and Katz (1995), the FGLS method tends to overestimate the significance
of coefficients. To assess the robustness of the results that are shown in Tables III and IV,
additional analyses are carried out to examine whether the reported regression results are
driven by the change in the estimation method. To do so, Beck and Katz’s (1995)
panel-corrected standard errors (PCSE) method is applied. Tables V and VI present the
regression coefficients obtained using the PCSE method. Overall, these coefficients maintain
the same sign and statistical significance as those obtained using the FGLS method.
This evidence supports the robustness of the findings presented here.

5. Discussion and conclusion

This paper examines the relation between CSR disclosure and the access to debt financing.
More precisely, it assesses whether firms with higher CSR disclosure scores have better
access to debt financing. The disclosure scores are collected from the Bloomberg database
and served as a proxy of the extent of the ESG information that is disclosed by French
companies. There are three subdimensions: environmental, social and governance. It is
argued that CSR disclosure reduces information asymmetry (Dhaliwal et al., 2011; Bose et al.,
2017) and improves the informational environment (Cormier and Magnan, 2014;
Krasodomska and Cho, 2017). In addition, firms that disclose extensive CSR information
have lower risks (Benlemlih et al., 2016) and better performance (Platonova et al., 2016;
Cahan et al., 2016). The economic and financial benefits of CSR that are deduced from the
previous literature are likely to encourage credit providers to pay appropriate attention
to ESG issues. In this regard, the volume of ESG information that is disclosed by firms
could be valuable and relevant for credit providers, and the latter would enhance the debt
accessibility for firms with good CSR disclosure policies.
 Panel-corrected standard errors
DTA_Ratio LTD_Ratio

ESG_Score 0.0550 (0.81) – – 0.0585 (1.19) – – –

SOC_Score – 0.0613 (1.20) – – 0.0042 (0.07) – –
ENV_Score – – 0.0147 (0.25) – – 0.0662 (1.00) –
GOV_Score – – 0.0161 (0.24) – – – 0.0335 (0.52)
Tobin_Q −3.3647*** (−3.97) −3.2495*** (−3.70) −3.2965*** (−3.74) −3.2952*** (−3.72) −2.4195** (−2.73) −2.4716** (−2.76) −2.4729** (−2.84) −2.4841** (−2.86)
Sales Growth −0.0186 (−0.30) −0.0211 (−0.36) −0.0209 (−0.35) −0.0211 (−0.35) −0.0016 (−0.03) −0.0019 (−0.03) −0.0006 (−0.01) −0.0002 (−0.00)
ROA −0.1484 (−1.28) −0.1337 (−1.19) −0.1423 (−1.26) −0.1429 (−1.26) −0.0069 (−0.07) −0.0164 (−0.17) −0.0189 (−0.19) −0.0175 (−0.17)
Intercept 29.4545*** (8.71) 28.7169*** (8.92) 31.1587*** (11.31) 30.7648*** (6.95) 21.3052 (6.49) 24.0219*** (7.93) 20.3159*** (4.58) 22.7555*** (6.75)
No. of 478
observations 478 478 478 478 478 478 478
2
R overall 0.3413 0.3454 0.3422 0.3424 0.2440 0.2440 0.2463 0.2440
Wald χ2 24.65 25.32 20.61 20.49 9.79 9.79 10.87 10.62
2
Prob Wald χ 0.0000 0.0000 0.0000 0.0000 0.0442 0.0442 0.0280 0.0312
Notes: DTA_Ratio is total leverage ratio measured by total debt over total assets; LTD_Ratio is long-term leverage ratio measured by long-term debt over total assets; SOC_Score is
social disclosure score retrieved the Bloomberg database; ENV_Score is environmental disclosure score retrieved from the Bloomberg database; GOV_Score is governance disclosure
score retrieved from the Bloomberg database; ESG_Score is environmental, social and governance disclosure score retrieved from the Bloomberg database; QTobin is Tobin’s Q,
which is the ratio of market value of equity plus total liabilities to total assets; Sales Growth is annual sales growth measured by the percentage of sales growth from year n−1 to year
n; ROA is firm profitability measured by the return on assets ratio. **,***Significant at 0.05 and 0.01 levels, respectively
financing
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and debt

407

Table V.
Robustness test with
leverage ratios as
dependent variable
 20,4

408
JAAR

Table VI.

respectively
short-term debts,
dependent variable
Robustness test with

the natural logarithm

of total, long-term and
Panel-corrected standard errors
Ln_TD Ln_LTD
ESG_Score 0.0351*** (6.43) 0.0403*** (4.67)
SOC_Score – 0.0162** (3.19) – – – 0.0257** (3.32) – –
ENV_Score – – 0.0277*** (5.59) – – – 0.0301*** (3.97) –
GOV_Score – – 0.0291** (3.17) – – 0.0362** (2.32)
Tobin_Q −0.6770*** (−5.65) −0.6354*** (−4.37) −0.6710*** (−5.26) −0.7026*** (−5.64) −0.7627*** (−3.70) −0.7149** (−3.02) −0.7567*** (−3.54) −0.7913*** (−3.90)
Sales Growth −0.0000 (−0.01) −0.0019 (−0.43) −0.0013 (−0.27) −0.0018 (−0.36) 0.0021 (0.25) −0.0001 (−0.02) 0.0004 (0.05) 0.0001 (0.01)
ROA −0.0186** (−1.87) −0.0143 (−1.54) −0.0185* (−1.76) −0.0236** (−1.99) −0.0149 (−1.19) −0.0088 (−0.73) −0.0153 (−1.09) −0.0206 (−1.26)
Intercept 7.1978*** (25.97) 7.8674*** (19.73) 7.6738*** (30.70) 7.0626*** (12.63) 6.6992*** (12.78) 7.1307 (11.75) 7.3149*** (17.62) 6.3836*** (6.35)
No. of
observations 478 478 478 478 476 476 476 476
R2 overall 0.7509 0.7445 0.7399 0.7117 0.6501 0.6433 0.6328 0.6126
Wald χ2 84.25 50.66 51.35 41.91 70.57 48.11 24.29 21.37
Prob Wald χ2 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0001 0.0003
Panel-corrected standard errors
Ln_STD
ESG_Score 0.0335*** (3.96)
SOC_Score – 0.0166** (2.07) – –
ENV_Score – – 0.0324*** (3.78) –
GOV_Score – – 0.0222 (1.62)
Tobin_Q −0.6467*** (−4.64) −0.6444*** (−4.25) −0.6373*** (−4.30) −0.6637*** (−4.69)
Sales Growth −0.0013 (−0.28) −0.0037 (−0.70) −0.0025 (−0.47) −0.0033 (−0.62)
ROA −0.0361** (−3.14) −0.0355** (−2.73) −0.0357** (−3.04) −0.0407** (−2.79)
Intercept 5.5604*** (16.06) 6.2129*** (12.96) 5.7909*** (18.71) 5.7535*** (6.86)
No. of
observations 476 476 476 476
R2 overall 0.5000 0.4741 0.4988 0.4568
Wald χ2 35.73 32.65 31.50 32.69
Prob Wald χ2 0.0000 0.0000 0.0000 0.0000
Notes: Ln_TD is the natural logarithm of total debt; Ln_LTD is the natural logarithm of long-term debt; Ln_STD is the natural logarithm of short-term debt; SOC_Score is social
disclosure score retrieved the Bloomberg database; ENV_Score is environmental disclosure score retrieved from the Bloomberg database; GOV_Score is governance disclosure score
retrieved from the Bloomberg database; ESG_Score is environmental, social and governance disclosure score retrieved from the Bloomberg database; QTobin is Tobin’s Q is the ratio of
market value of equity plus total liabilities to total assets; Sales Growth is annual sales growth measured by the percentage of sales growth from year n−1 to year n; ROA is firm
profitability measured by the return on assets ratio. **,***Significant at 0.05 and 0.01 levels, respectively
Using a panel data analysis of French listed firms belonging to the SBF 120 index during CSR disclosure
the period from 2010 to 2015, overall, a positive relation between CSR disclosure scores and and debt
debt is found. financing
The results of the overall ESG, environmental and governance scores are not inclusive
since they are significant only for some measures of debt. There are positive relations
between the environmental disclosure score and the natural logarithms of the total (Ln_TD),
long-term (Ln_LTD) and short-term (Ln_STD) debt, respectively. These findings 409
are consistent with Thompson and Cowton (2004), suggesting that lenders incorporate
environmental information into their lending decisions. They can be attributed to the
importance of environmental information for assessing environmental risk, which affects
credit risk (Mengze and Wei, 2015). Therefore, the ESG score has significant positive effects
only on the natural logarithms of long-term and short-term debt. The overall CSR disclosure
is a combination of ESG information and the lenders’ sensitivity differs according to the
type of CSR information. As a result, this might have caused the insignificant effect of
the ESG variable on other measures of debt. In addition, the governance disclosure score has
a statistically significant coefficient only for the long-term debt. Since they reveal the long-
term perspectives of socially responsible French firms, governance information is
particularly attractive long-term credit providers.
The social disclosure score has statistically significant coefficients for all debt
measures, leading us to conclude that social information matter to lenders. These findings
are consistent with those of previous studies (Yang et al., 2018), thus suggesting that
social disclosure plays a significant role in reducing information asymmetry and
attracting lenders. The findings could partially be explained by the significant position
occupied by CSR in the French market and the high awareness of social issues in this
context, which, subsequently, invite lenders to incorporate social information into their
lending decisions.
Overall, the results show that French companies that disclose a high level of CSR
information are likely to meet the expectations of their credit providers in terms of
extrafinancial indicators. These firms are more likely to earn the support of lenders and
thereby enjoy preferential treatment, which translates into better access to debt financing.
Another explanation for this relationship is that CSR disclosures provide lenders with
relevant extrafinancial indicators (that complete financial information) that are useful for
the assessment of French firms. This leads to lower information asymmetry and
improves the transparency regarding the social and environmental impacts of French
companies and their governance practices. Transparent firms in term of CSR activities are
often regarded as less likely to expropriate their stakeholders, including credit providers.
In addition, the perceived trustworthiness of firms disclosing a high level ESG
information may be reflected in their better treatment by lenders through increased access
to debt financing.
This paper attempts to provide a better understanding of the effects of CSR information in
order to assist corporate managers wishing to meet credit providers’ expectations and attract
debt financing sources. In France, the regulations and laws regarding CSR continue to be
developed. The French Parliament has adopted several laws requiring transparency in the
environmental, social, and corporate governance policies of French firms. In this business
environment, an increasing number of CEOs regard CSR activities as constraints rather than
opportunities. This study provides evidence that the high disclosure of CSR information is a
pull factor for lenders. It emphasizes the attractiveness of CSR disclosures to this influential
stakeholder group. The findings confirm the view of Cheng et al. (2014) that firms that are able
to develop successful CSR strategies and subsequently satisfy the requirements of their key
stakeholders for CSR information can generate benefits in the form of better access to
financing. In addition, this study of CSR implications may be of interest to credit providers
JAAR who can now pay more appropriate attention to ESG issues. The findings show that the CSR
20,4 reports of French firms include relevant extrafinancial indicators that could be taken into
account for firms’ assessment. Finally, this study may interest French market authorities
looking to report more about the economic and financial benefits of the transparency around
CSR activities for French firms. This may play a role in changing the view of certain firms that
consider CSR as a constraint rather than an opportunity.
410 The findings of this study should be interpreted with caution, given that there are at least
three limitations. First, the results should not be generalized since the sample was based on
large French companies for 2010–2015. The second limitation concerns the negligence of
some control variables (e.g. the nature of the industry, the external business conditions and
the age of the firm) that are likely to influence the findings of this study. The third limitation
concerns the absence of the quality dimension of ESG information. This study is based only
on the quantity of the ESG information that is disclosed by French companies without
addressing the quality of the CSR disclosure. For future studies, it would be valuable to use
CSR disclosure proxies that take into account the quality dimension in addition to the extent
of CSR disclosure.

Notes
1. See The UN Global Compact-Accenture Strategy CEO Study – Accenture, which is available at:
www.accenture.com/us-en/insight-un-global-compact-ceo-study
2. See The report of Ministry of Foreign Affairs (2012), which is available at: www.diplomatie.gouv.
fr/IMG/pdf/Mandatory_reporting_built_on_consensus_in_France.pdf
3. EU is the European Union.
4. See France’s commitment to corporate social responsibility (CSR), which is available at: www.
diplomatie.gouv.fr/en/french-foreign-policy/economic-diplomacy-foreign-trade/corporate-social-
responsibility/
5. For more information, see KPMG (2015), which is available at: https://home.kpmg.com/content/
dam/kpmg/pdf/2015/12/KPMG-survey-of-CR-reporting-2015.pdf
6. The empirical findings of Servaes and Tamayo (2013) show that CSR activities can add value to
the firm but only under certain circumstances. In fact, they find a positive relationship between
CSR and firm value for firms with high customer awareness. This relation is either negative
or insignificant for firms with low customer awareness. They demonstrate that the effect of
awareness on the CSR–value relation is reversed for firms with previously poor reputations as
corporate citizens.
7. The majority of previous studies analyze how investors perceive CSR disclosure and how the
stock exchange market reacts to these publications. They examine the relevance of CSR
disclosure, mainly with respect to firm value (Cahan et al., 2016; Platonova et al., 2016), the equity
cost (Dhaliwal et al., 2011; El Ghoul et al., 2011; Michaels and Grüning, 2017) and the forecasts of
financial analysts (Cormier and Magnan, 2014; Krasodomska and Cho, 2017).
8. Using a sample of 180 US companies, Eccles et al. (2012) compare firms that voluntarily adopted
environmental and social policies by 1993 – referred to as high sustainability companies – and
firms that adopted almost none of these policies – referred to as low sustainability companies.
9. Benabou and Tirole (2010) discuss the arguments for asking firms to incorporate social and
environmental dimensions into their activities, that is, to be socially responsible. The authors
suggest that CSR is about taking a long-term perspective when maximizing profits.
10. The authors use CSR ratings from the MSCI ESG Stats Database. The score is computed using
five stakeholder-oriented categories (environment, employees, human rights, community and
diversity). For each of the five categories, we consider ESG Stats compiles statistics on both the
strengths and concerns.
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Corresponding author
Amal Hamrouni can be contacted at: hamrounia@excelia-group.com

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