Corporate Social Responsibility and Debt Default from the Perspective of Materiality
Sustainable economic development has emerged as a key trend for the future growth of China.In this context,the fulfillment of corporate social responsibility(CSR)has evolved as an inevitable decision for companies.While some scholars have examined the implications of CSR on corporate financial risk and financing decisions,the integration of CSR often comes with prolonged investment and extended return periods,leaving the companies faced with notable debt pressure.Despite this,limited research has been conducted on the potential influence of CSR on the possibility of debt default.Notably,due to the lack of clear and precise CSR guidelines,CSR practices in some companies currently incline towards being superficial and lack material implementation.Hence,by choosing A-share listed companies from 2010 to 2019 as our re-search samples,we collect manual industry-specific CSR data from the perspective of material CSR.We explore the impact of material CSR on the possibility of debt default.Guided by signal theory and resource dependence theory,we evaluate corpor-ate debt default possibility from both ex-ante prediction and ex-post testing perspectives.This study examines the impact of both material and immaterial CSR fulfilments have on corporate reputation and resource allocation,and subsequently its im-pact on the relationship with the debt default possibility.And the research also considers the heterogeneous characteristics of the regional market environment and government intervention factors.This study finds that the level of CSR fulfillment,especially immaterial CSR,can reduce the expected possibility of debt default through signal effects.This impact is more pronounced in areas with lower social credit level,partially affirming the presence of greenwashing.However,material CSR obtains bank credit bias through the implicit guarantee of the government,which disrupts the bank's initial credit screening decision,impeding the banks'ability to perform an efficient supervisory role,thereby increasing the possibility of corporate debt default.This phenomenon is more pronounced in state-owned enterprises or regions with strong government intervention.Exploring CSR's impact on debt default from a materiality perspective helps eliminate the noise interference of speculat-ive behavior,thus exposing the intrinsic motivation and risk transmission mechanism of CSR fulfillment.This study concen-trates on the bank's proactive credit screening preference for material CSR.It emphasizes the government's implicit guarantee on credit decisions and their ability to identify material CSR.It not only enriches the research on CSR's economic con-sequences but also provides some benchmark values for government regulatory agencies on how to improve and optimize the capital market.
corporate social responsibilitymaterial corporate social responsibilitydebt default possibilitycredit screeninggovernment intervention
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