Corporate ESG competitive disadvantage and cost of debt financing

Shanfei Zhang, Guanghua Xu, Ying Shu and Jian Zhu

Finance Research Letters, 2024, vol. 69, issue PA

Abstract: This paper examines the impact of firms' ESG competitive disadvantages on debt financing costs using data from Chinese A-share listed firms from 2011 to 2021. It reveals that (1) ESG competitive disadvantages heighten debt financing costs; (2) local environmental concerns and industry competition strengthen this relationship; (3) ESG competitive disadvantages increase financing costs through heightened financial risk and information asymmetry; and (4) this relationship is significant particularly for mature, declining, and privately-owned firms. This paper, for the first time, explores the penalisation mechanism of corporate negative ESG performance, providing new evidence to advocate for proactive ESG governance.

Keywords: ESG competitive disadvantage; Cost of debt financing; Public environmental concern; Industry competition (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324011310
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: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324011310

DOI: 10.1016/j.frl.2024.106102

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 ().