Corporate social performance and cost of capital: A meaningful relationship?

Although previous studies on the CSP-risk relationship have provided a pivotal contribution to explain the CSP-risk linkage, the impact that the strategic management of stakeholder expectations has on the financial and nonfinancial risk of a company and on corporate social performance still needs to be highlighted. This chapter addresses the issue by analyzing the possible link between a reliable, robust and verifiable measure of CSP, developed and provided by the SAM Group, and the weighted average cost of capital (WACC), a synthetic indicator that embodies the overall risk as perceived by stakeholders and especially by the financial ones