Corporate integrity culture and debt costs

Xiaofang Guo, Xingye Jin, Jingyu Wang and Congjiang Zuo

International Review of Financial Analysis, 2025, vol. 106, issue C

Abstract: This study examines the effect of corporate integrity culture on debt costs and its underlying mechanisms. The study constructs an index of corporate integrity culture based on the annual reports of Chinese A-share listed corporations by integrating large language models with machine learning. It analyzes the effect of integrity culture on debt costs. Findings show that corporations valuing integrity culture have significantly lower debt costs; this result holds after robustness checks. Mechanism analysis indicates that integrity culture strengthens corporate transparency and governance while reducing corporate violations and lowering debt costs. Heterogeneity analysis shows that the impact is more significant in private corporations, corporations with high external attention, and corporations in areas with higher marketization.

Keywords: Debt cost; Corporate integrity culture; Large language models; Machine learning (search for similar items in EconPapers)
JEL-codes: G32 G34 M14 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005988

DOI: 10.1016/j.irfa.2025.104511

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