Economics at your fingertips  

ESG and Firm's Default Risk

Hao Li, Xuan Zhang and Yang Zhao

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: We investigate the implications of ESG practices of Chinese listed firms on their default risk. We explore the relationship between default risk and ESG ratings. Applying year-by-season and firm fixed effects, we find that higher ESG ratings mitigate firms’ default risk. The mitigation effect increases as the term structure of default risk increases. We find that the magnitude of ESG rating's impact on firms’ default risk is smaller for manufacturing firms than non-manufacturing firms. Our findings suggest that credit markets well reflect the ESG practices of firms; investors may improve credit risk management by considering the ESG performances of firms.

Keywords: Environmental, Social, Governance (ESG); Default risk; Listed firms; JEL Classification: G24, G33 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

DOI: 10.1016/

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2022-07-09
Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200040x