Impact of ESG Rating on Corporate Finance Costs

Yuxi Li ()
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Yuxi Li: Jiangxi University of Finance and Economics, International College

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 401-411 from Springer

Abstract: Abstract With the global focus on sustainable development, green finance has become a topic of great interest in recent years, which is also affecting the cost and decision-making of every enterprise. However, China, as an emerging country practicing green finance policies, has significant gaps in the research on this part of corporate finance costs. Therefore, this paper will explore the factors affecting corporate financing costs in the context of green economy. This paper will screen out the independent variables that significantly affect the enterprise financing cost, and use SPSS to conduct multiple linear regression analysis on them, and according to the empirical analysis, it is concluded that the enterprise financing cost with high P/E ratio may be due to the enterprise’s high market expectation accompanied by high risk. Corporate Gearing ratio has a negative impact on corporate financing cost due to the tax shield effect. Based on this conclusion, it is suggested that the government should carry out green innovation and promote the transformation of enterprises to environmentally friendly enterprises.

Keywords: Green Economy; ESG performance; Enterprise Financing; Weighted Average Cost of Capital(WACC) (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-874-5_48

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DOI: 10.2991/978-94-6463-874-5_48

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