Primary Corporate Bond Markets and Social Responsibility

Author: Michael Halling, Jin Yu, Josef Zechner

We document that good ES-performance is rewarded in primary bond markets by lower spreads. This relation is strongest for low-rated bonds and for firms in manufacturing, agriculture, mining and construction. The pricing effects are linked to product-related and, to a lesser extent, to employee-related ES-dimensions. Environment-related aspects only matter for those industries with largest exposure to environmental risks. The results do not seem to be determined by crisis periods or by growing investor interest in ESG. Instead, we document a link between ES-scores and credit risk. Thus, our evidence suggests that some ES-dimensions capture information that is relevant for default risk.

Halling, Michael and Yu, Jin and Zechner, Josef, Primary Corporate Bond Markets and Social Responsibility (September 26, 2021). Swedish House of Finance Research Paper No. 20-13, Available at SSRN: or

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