Zurich, December 12, 2013 – A study on the effect of negative news on credit risk has won the UNPRI award as part of the PRI’s annual Academic Network conference in Paris last month.
Julian Koelbel, a PhD student at the Swiss Federal Institute of Technology in Zurich, won the best student paper award, sponsored by Sustainalytics, for his study “The effect of bad news on credit risk: a media based view of the pricing of corporate social responsibility”. Professor Timo Busch of the University of Hamburg co-authored the study.
The study combined two data providers: Bloomberg for Credit Default Swap (CDS) spreads and RepRisk for negative news related to corporate social responsibility (CSR). For each company, the study authors counted the number of RepRisk news per quarter that criticizes the company for environmental, social or governance (ESG) issues. They included news from a broad range of sources including international and local media, NGOs, government agencies, think tanks, blogs and more; news items that appeared in a media outlet with broader readership were assigned a larger weight.
The sample size was determined by the availability of the CDS data and consists of 413 firms from all industries excluding financial services during the period from 2007 to 2012. The results show that the news count has a significant, positive coefficient, which means that more negative news on CSR issues are associated with higher credit default swap spreads.
Julian Koelbel stated: “What I like about this study is that it frames CSR as something that is very dynamic, not a one-size-fits-all approach. What CSR is and what it should be is not set in stone, but is debated every day. I think this is a very realistic approach and the data shows us that it works.”
The PRI-CDC (Caisse de Dépôts) Academic Network Conference 2013 attracted more than 160 delegates from 60 universities and research institutions and featured presentations on more than 40 new papers.
“Receiving an award as a young researcher is a great motivation to continue and produce more work that I hope will also be valuable in the academic and business world and contribute to the debate on CSR” concluded Julian Koelbel.
The study’s executive summary is available here
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About RepRisk AG
RepRisk is the leading provider of business intelligence on environmental, social and governance (ESG) risks. As such, RepRisk systematically collects and analyzes criticism, controversy and negative incidents related to companies and projects worldwide. It does so on a daily basis and in 13 languages from thousands of public sources including international and local media, government agencies, non-governmental organizations (NGOs), newsletters, social media and blogs.
The RepRisk database currently includes information on over 39,000 companies, 9,000 projects, 6,000 NGOs and 5,000 governmental bodies. These numbers are continuously growing as relevant ESG information is added.
The use of RepRisk business intelligence allows companies and financial institutions to proactively assess ESG issues that may present financial, reputational and compliance risks. For more information about the usage and benefits of RepRisk in relation to the effective management of ESG Risk, please visit our website: www.reprisk.com
