The Impact of ESG on Excessive Corporate Debt

Xinhua Yang, Tingting Yang, Jingjing Lv and Shuai Luo ()
Additional contact information
Xinhua Yang: School of Economics, Guangdong Ocean University, Zhanjiang 524088, China
Tingting Yang: School of Economics, Guangdong Ocean University, Zhanjiang 524088, China
Jingjing Lv: School of Economics, Guangdong Ocean University, Zhanjiang 524088, China
Shuai Luo: School of Economics, Guangdong Ocean University, Zhanjiang 524088, China

Sustainability, 2024, vol. 16, issue 16, 1-22

Abstract: ESG standards are increasingly becoming indispensable factors in corporate decision-making, with profound implications for the long-term sustainability of businesses. This study utilizes longitudinal data from 2010 to 2021 to investigate the influence of environmental, social, and governance (ESG) performance on excessive debt among publicly traded manufacturing companies in China. Employing panel regression alongside analysis of threshold, intermediary, and interaction effects, we meticulously dissect the mechanisms and influencing factors involved. Our findings reveal a significant adverse effect of ESG performance on excessive debt, characterized by heterogeneity across geographic locations, revenue growth rates, and ownership concentrations. Notably, company size and age exhibit a dual-threshold effect on excessive debt. Moreover, ESG performance demonstrates an intermediary effect, which is mitigated by proxy cost-to-asset turnover and debt financing cost COD2. Institutional attention and equity capital cost synergistically amplify the suppressive impact of ESG performance on excessive debt. Based on the research findings above, companies should carefully consider and adjust their ESG performance to reduce excessive debt risks, thereby enhancing their sustainable competitiveness.

Keywords: ESG; excessive debt; sustainability; mechanism test; financial risk (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/16/6920/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/16/6920/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:16:p:6920-:d:1454866

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().