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Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

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  • Jyotirani Gupta
  • Niladri Das

Abstract

This study investigates the relationship between corporate social responsibility disclosure (CSRD) and the cost of financing for firms in emerging economies. Results show that CSRD initially reduces the cost of equity financing but increases equity costs beyond a certain threshold. Firms should weigh the trade‐offs of signal cost and benefits when choosing financing strategies. Moreover, investors in the debt market perceive a higher level of board independence as less risky, which consequently has a negative impact on the relationship between CSRD and the cost of debt. Thus, companies should streamline their CSR disclosures to reduce their cost of capital.

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  • Jyotirani Gupta & Niladri Das, 2024. "Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 1927-1943, June.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:4:p:1927-1943
    DOI: 10.1002/mde.4111
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