The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation

Anis Maaloul (), Daniel Zéghal, Walid Ben Amar and Sari Mansour
Additional contact information
Anis Maaloul: TELUQ University of Quebec
Daniel Zéghal: University of Ottawa
Walid Ben Amar: University of Ottawa
Sari Mansour: TELUQ University of Quebec

Corporate Reputation Review, 2023, vol. 26, issue 1, No 1, 18 pages

Abstract: Abstract Prior studies on the relationship between ESG information and cost of debt have found mixed results. They conclude that this relationship may be affected by some characteristics or attributes of the company. In this study, we examine whether corporate reputation mediates the relationship between ESG information and cost of debt. In other words, this study explores how ESG information influences corporate reputation, and how, in turn, corporate reputation affects the cost of debt financing. Data for corporate reputation were obtained from the Fortune “World’s Most Admired Companies” List, whereas data on ESG information were extracted from two sources: ESG performance were obtained from Sustainalytics database and ESG disclosure were obtained from Bloomberg database. Data on cost of debt and other control variables were also collected from Bloomberg database. Using structural equation models, we report a positive effect of both ESG performance and disclosure on corporate reputation. We also find that a good corporate reputation reduces the cost of debt financing and mediates the relationship between ESG performance/disclosure and cost of debt. We therefore conclude that firms that manage and disclose information on ESG issues have a better reputation, which in turn reduces their debt financing costs.

Keywords: Environmental; social; and governance (ESG); Performance; Disclosure; Corporate reputation; Cost of debt (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://link.springer.com/10.1057/s41299-021-00130-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:pal:crepre:v:26:y:2023:i:1:d:10.1057_s41299-021-00130-8

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41299

DOI: 10.1057/s41299-021-00130-8

Access Statistics for this article

Corporate Reputation Review is currently edited by Guido Berens

More articles in Corporate Reputation Review from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().