Bondholders' returns and stakeholder interests : when are they aligned?

Using Barney's (2018) stakeholder perspective of resource-based theory (SRBT), we arguethat bondholders represent the ultimate fixed claimants who value corporate socialresponsibility (CSR) in relation to the firms' risk. Bondholders' returns and the stakeholders'interests are aligned when firms have concerns or controversies (risk) but they are not alignedfor firms' CSR strengths (investments) because it represents higher asset substitution risk.The alignment and misalignment of bondholders and stakeholders' interests are weaker forbonds with longer maturities but greater after a negative shock in credit markets. Analysing asample of 5,240 bonds in a portfolio setting from 425 U.S. companies during 2001 to 2014,we find evidence to support our hypotheses. We demonstrate that the bondholders' andstakeholders' interests are aligned under above conditions