Shyam Kumar

The Effects of Institutional Corporate Social Responsibility on Bank Loans

The authors study the impact of institutional corporate social responsibility (CSR)—defined as CSR targeted at a borrowing firm’s secondary stakeholders—on bank loans. Findings suggest that higher levels of institutional CSR are associated with lower levels of interest rates and loan spreads. In addition, institutional CSR also tempers the positive impact of loan maturity and firm leverage on interest rates and loan spread. These effects were strongest among firms that demonstrated sustained performance, rather than among firms that showed mixed performance in terms of their secondary stakeholder-related activities. This study indicates institutional CSR is valued by stakeholders for its risk mitigating and transaction cost reducing effects independent of technical CSR, defined as CSR targeted at primary stakeholders.

IPO Underpricing and Discretionary Investments

We study the relationship between initial public offering (IPO) underpricing and subsequent firm strategy. Utilizing prospect theory and the house money effect, we argue that managers of underprice...