Corporate Social Responsibility and Access to Finance

A Study of Firms on the Ghana Stock Exchange

Abstract

This study investigates the relationship between corporate social responsibility (CSR) and access to finance, using data from companies listed on the Ghana Stock Exchange (GSE). The study adopted multiple regression in investigating the relationship between corporate social responsibility (CSR) in terms of profitability (measured by return on equity – ROE) and philanthropy (measured by corporate social responsibility disclosures – CSRED), and access to finance (measured by growth in equity, retained earnings, debt and working capital). Economic responsibility and access to finance measured by growth in retain earnings are negatively and insignificantly associated. Discretionary responsibility has positive and significantly relationship with growth in equity capital. Again, economic responsibility is negatively and insignificantly related to growth in debt stock, while discretionary responsibility is positively and significantly associated with growth in debt stock. Finally, economic responsibility is negatively related to growth in working capital, while discretionary responsibility is positively related to growth in working capital, but both cases are significant. The study encourages firms to embark on higher-level social responsibility since that can alleviate access to finance challenges faced by firms.