Bondholders’ returns and stakeholders’ interests

This study examines the relationship between firms’ corporate social responsibility (CSR) or environmental, and governance performance bondholders’ returns. We argue that bondholders are fixed claimants who only value CSR in relation to risks. hypothesize firms with concerns controversies tend increase default risk which would adversely affect also investments (CSR strengths) opportunity for residual (i.e., shareholders) shift investment bondholders. Hence, strengths represent higher asset substitution risk-shifting. returns stakeholders’ interests aligned when have but their not since The alignment misalignment moderated by bond maturities affected a negative shock credit market. Analysing sample of 5240 bonds portfolio setting from 425 U.S. companies during pre-green era (2001–2014), we find evidence support our hypotheses.