Corporate Social Responsibility And Access Of Finance

1424 Words Nov 10th, 2014 6 Pages
The article “Corporate Social Responsibility and Access to Finance” was written by Cheng et al. (2014) in order to show that firms that have better CSR performance are less capital constrained. The aim of the essay is to argue that the analysis of the relationship between CSR policies and the access to finance is a well done research with interesting arguments and analysis; however, it has several limitations, which will be examined. The aim will be achieved through a critical analysis of the paper. It will be done in four stages: first, the key arguments of the article, second, the strong points of the article, third, the limitations of the research, and final stage, the specifications of the outcome. In this paper Cheng et al. (2014) argued that the implementation of successful CSR policies leads to lower idiosyncratic risk due to improved stakeholder engagement, which reduce agency costs of an organisation, and increased transparency, which results a company becoming less capitally constrained and enhances a firm’s access to finance in capital markets. In order to achieve their aim the authors use cross sectional analysis of firms around the world and apply different variables and methods. They concluded that there is a link between good CSR activities and access to finance; however, social and environmental components of CSR are more significant for investors than the factor of governance since the former ones have higher impact on capital constraints. It can be…
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