Using a sample of loan facilities from 30 countries around the world, we investigate how national cultures affect the relationship between a firm's corporate social responsibility (CSR) performance and its bank borrowing costs. We find that firms with superior CSR performance are more likely to enjoy lower loan interest spreads in countries that exhibit higher levels of egalitarianism and harmony and/or lower levels of hierarchy and mastery. Further analyses reveal that the impact of national culture on the relationship between CSR performance and loan interest spreads is especially significant for borrowing firms with higher customer awareness, heavier R&D intensity, and more opaque information environment. We find national culture of the bank lender itself play an important role in shaping the relation between CSR performance and loan contracting as well. Overall, our findings highlight the important role of national culture in determining the economic consequences of CSR commitments and provide implications for corporate managers who make decisions about CSR strategies.

This study attempts to identify the connection between the board of directors (BoD) and the controlling shareholder. We investigate how this connection affects the corporate governance practice and market performance of Hong Kong listed firms. Our results reveal that close connections between the BoD and the controlling shareholder have a negative effect on corporate governance practice. Our findings also indicate a lower market valuation for firms with a connected BoD. The evidence suggests that the market discounts the value of firms with a connected BoD. The evidence seems to reinforce the importance of the role of independent non-executive directors (INEDs) to enhance the independence of BoD.