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Centre for Building Sustainable Value

Vanya Rusinova

Copenhagen Business School

Access to Finance and Corporate Social Responsibility: Evidence from a Natural Experiment 


 In this paper, we empirically test the relationship between improved access to finance and firm social performance with a sample of firms listed in the S&P 1500 index as well as in the KLD social performance database. To establish causality, we use the exogenous variation in firm-level capital constraints induced by the American Jobs Creation Act (AJCA) of 2004. The act provided a significant one-off reduction in tax-related costs to profits repatriated from foreign subsidiaries back to the U.S.-based parent firm. The tax cut lowered the cost of internal financing and thereby improved the overall access to finance for firms repatriating under the act. Results from a sample of 933 U.S. firms for the years 2001 through 2007 provide causal evidence that improved access to finance leads to higher performance on CSR. Additionally, we test whether the effect on CSR performance is stronger among firms, which were financially constrained prior to the act, for firms where agency problems are more likely to exist and for firms with lower prior performance on CSR.


Vanya Rusinova is a PhD student in International Business at the Department of International Economics and Management at Copenhagen Business School. She holds a Master’s in Advanced Economics and Finance from Copenhagen Business School. Her research interests include Corporate Social Responsibility, Sustainability and Corporate Governance. Her PhD thesis focuses on the drivers of firms’ social performance. She is currently working on a project testing for causal effect of improved access to finance on firms’ social performance, as well as a project examining the insurance-like properties of CSR. 

Vanya Rusinova

Vanya Rusinova

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