Blockholders, Environmental Information Disclosure, and the Cost of Debt

Lei Wang, Yi-Fan Sha, Yin-Che Weng and Feng-Wei Zhuang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 5, 1177-1196

Abstract: Debt financing is an essential source of external funds for Chinese-listed companies, but enterprises in heavily polluting industries face more severe financing difficulties due to the “financing penalty effect.” Solving the financing difficulties of heavy pollution enterprises has become a hot topic in academic and practical circles. This article applies heavily polluting listed companies from 2013 to 2022 in China as a sample to examine the impact of multiple blockholders (MB) on debt financing costs (DFC), considering the intermediary role of environmental information disclosure (EID). This article reveals that improved environmental information disclosure, driven by multiple blockholders, especially state-owned ones, can effectively reduce debt financing costs for heavily polluting enterprises compared to those dominated by a single major shareholder. These findings remain robust even after considering a series of checks, including the instrument variable method, propensity score matching (PSM), and alternative variables. In cases where the separation of ultimate control rights and cash flow rights is slight or the entity is state-owned, state-owned blockholders tend to exert a more effective governance role. Our research helps understand the role of multiple blockholders in corporate “green governance” and can provide a reference for alleviating the financing constraints of heavy-polluting enterprises.

Date: 2025
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DOI: 10.1080/1540496X.2024.2420601

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