The Impact of Corporate Social Responsibility on the Company's Capital Structure

This study investigates the link between corporate social responsibility (hereafter, CSR) and capital structure of the company, which seems to be relatively unexplored relation. In order to fill this research gap, we hypothesize that socially responsible firms face lower level of debt-to-equity ratio. It is assumed that this link can be attributed to: a) reduced information asymmetry and b) lower cost of equity which can be achieved in capital markets. Using a linear regression analysis for a panel data of 184 European firms, we expect to yield the negative relation between CSR and leverage. We begin the project proposal by presenting a background and problem statement, which will highlight the continuing relevance of CSR concept. Next, we move to a literature review and discuss possible positive outcomes of CSR engagement. Finally, the results anticipated will be listed and conclusions are drawn.