Corporate ESG performance and trade credit financing – Evidence from China

Chunhua Luo, Dianlong Wei and Feng He

International Review of Economics & Finance, 2023, vol. 85, issue C, 337-351

Abstract: This paper explores the impact of firms' comprehensive ESG (environmental, social, and governance) ratings on their trade credit financing in the Chinese market. Using a sample of publicly listed companies from 2011 to 2019, we find that corporate ESG performance could significantly increase a firm's access to trade credit. These results still hold after a series of robustness checks. Furthermore, ESG increases a firm's trade credit by mitigating information asymmetry, improving operating efficiency and reducing risk. Our study provides general implications to encourage firms to participate in ESG in the current carbon emission transition period.

Keywords: ESG; Trade credit; Information asymmetry; Chinese market (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:85:y:2023:i:c:p:337-351

DOI: 10.1016/j.iref.2023.01.021

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