The effect of the government's green grip: Evidence from government-initiated corporate environmental ratings and corporate debt financing

Xiaojuan Liu, Xiaoyijing Chen and Baijun Deng

Pacific-Basin Finance Journal, 2023, vol. 80, issue C

Abstract: The Chinese government has initiated corporate environmental ratings to curb environmental pollution. We investigate the impact of such ratings as a type of government green grip on corporate debt consequences. We provide solid evidence that government-initiated corporate environmental ratings help environmentally friendly companies obtain more long-term loans and reduce the cost of debt. Lenders view a healthy environment as a signal of good credit; accordingly, they offer greener companies more favorable debt financing terms. The positive effect of government-initiated corporate environmental ratings is magnified by other government green-credit policies and the external financing environment. Overall, this study provides a valuable understanding of government-initiated corporate environmental ratings and corporate financing consequences.

Keywords: Corporate environmental performance; Cost of debt; Long-term loans (search for similar items in EconPapers)
JEL-codes: G32 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X2300121X
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:pacfin:v:80:y:2023:i:c:s0927538x2300121x

DOI: 10.1016/j.pacfin.2023.102055

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().