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The consequences of financial leverage : Certified B Corporations' advantages compared to common commercial firms

Ine Paeleman, Nadja Guenster, Tom Vanacker (UGent) and Ana Cristina O. Siqueira
(2024) JOURNAL OF BUSINESS ETHICS. 189. p.507-507
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Abstract
Firms usually need to attract debt to form and grow, but increasing financial leverage also entails increased risks and costs for stakeholders, such as customers and employees. Accordingly, past research suggests that for common commercial firms (CCFs), which prioritize profits, higher leverage leads to lower sales growth and higher employment costs. However, Certified B Corporations (CBCs) distinguish themselves by having a credible prosocial mission and, therefore, might be better insulated against the adverse effects of higher leverage. Using a European multi-country matched sample of 136 CBCs and 136 CCFs, we find that the negative relationship between leverage and sales growth and the positive relationship between leverage and employment costs are weaker for CBCs than CCFs. Taken together, due to their certified prosocial mission, CBCs enjoy an advantage in debt financing compared to CCFs.
Keywords
B Corp social firms, enterepreneurial finance, social entrepreneurship, Entrepreneurial finance, Social entrepreneurship, APITAL STRUCTURE, MORAL IDENTITY, SOCIAL ENTREPRENEURSHIP, BENEFIT, CORPORATION, SLACK RESOURCES, BUSINESS, RESPONSIBILITY, IMPACT, PROFIT, COSTS

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MLA
Paeleman, Ine, et al. “The Consequences of Financial Leverage : Certified B Corporations’ Advantages Compared to Common Commercial Firms.” JOURNAL OF BUSINESS ETHICS, vol. 189, 2024, pp. 507–507, doi:10.1007/s10551-023-05349-5.
APA
Paeleman, I., Guenster, N., Vanacker, T., & Siqueira, A. C. O. (2024). The consequences of financial leverage : Certified B Corporations’ advantages compared to common commercial firms. JOURNAL OF BUSINESS ETHICS, 189, 507–507. https://doi.org/10.1007/s10551-023-05349-5
Chicago author-date
Paeleman, Ine, Nadja Guenster, Tom Vanacker, and Ana Cristina O. Siqueira. 2024. “The Consequences of Financial Leverage : Certified B Corporations’ Advantages Compared to Common Commercial Firms.” JOURNAL OF BUSINESS ETHICS 189: 507–507. https://doi.org/10.1007/s10551-023-05349-5.
Chicago author-date (all authors)
Paeleman, Ine, Nadja Guenster, Tom Vanacker, and Ana Cristina O. Siqueira. 2024. “The Consequences of Financial Leverage : Certified B Corporations’ Advantages Compared to Common Commercial Firms.” JOURNAL OF BUSINESS ETHICS 189: 507–507. doi:10.1007/s10551-023-05349-5.
Vancouver
1.
Paeleman I, Guenster N, Vanacker T, Siqueira ACO. The consequences of financial leverage : Certified B Corporations’ advantages compared to common commercial firms. JOURNAL OF BUSINESS ETHICS. 2024;189:507–507.
IEEE
[1]
I. Paeleman, N. Guenster, T. Vanacker, and A. C. O. Siqueira, “The consequences of financial leverage : Certified B Corporations’ advantages compared to common commercial firms,” JOURNAL OF BUSINESS ETHICS, vol. 189, pp. 507–507, 2024.
@article{01GRTJHKMC7VRTP3HT6QP8G7BK,
  abstract     = {{Firms usually need to attract debt to form and grow, but increasing financial leverage also entails increased risks and costs for stakeholders, such as customers and employees. Accordingly, past research suggests that for common commercial firms (CCFs), which prioritize profits, higher leverage leads to lower sales growth and higher employment costs. However, Certified B Corporations (CBCs) distinguish themselves by having a credible prosocial mission and, therefore, might be better insulated against the adverse effects of higher leverage. Using a European multi-country matched sample of 136 CBCs and 136 CCFs, we find that the negative relationship between leverage and sales growth and the positive relationship between leverage and employment costs are weaker for CBCs than CCFs. Taken together, due to their certified prosocial mission, CBCs enjoy an advantage in debt financing compared to CCFs.}},
  author       = {{Paeleman, Ine and Guenster, Nadja and Vanacker, Tom and Siqueira, Ana Cristina O.}},
  issn         = {{0167-4544}},
  journal      = {{JOURNAL OF BUSINESS ETHICS}},
  keywords     = {{B Corp social firms,enterepreneurial finance,social entrepreneurship,Entrepreneurial finance,Social entrepreneurship,APITAL STRUCTURE,MORAL IDENTITY,SOCIAL ENTREPRENEURSHIP,BENEFIT,CORPORATION,SLACK RESOURCES,BUSINESS,RESPONSIBILITY,IMPACT,PROFIT,COSTS}},
  language     = {{eng}},
  pages        = {{507--507}},
  title        = {{The consequences of financial leverage : Certified B Corporations' advantages compared to common commercial firms}},
  url          = {{http://doi.org/10.1007/s10551-023-05349-5}},
  volume       = {{189}},
  year         = {{2024}},
}
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