Corporate ESG Performance and Cost of Debt Capital

Wenjun Wu

doi:10.54097/hbem.v9i.7764

Authors

Wenjun Wu

DOI:

https://doi.org/10.54097/hbem.v9i.7764

Keywords:

ESG Performance; Cost of Debt Capital; Nature of Ownership; Quality of Internal Control; External Supervision.

Abstract

The impact of corporate ESG performance on the cost of debt capital is examined using A-share listed companies in Shanghai and Shenzhen from 2007 to 2021 as the research sample. The empirical results show that ESG performance has a significant negative relationship with the cost of debt capital, i.e., firms can reduce their cost of debt capital by improving ESG performance. It is further found that ESG performance has a stronger effect on reducing the cost of debt capital for non-state-owned enterprises than for state-owned enterprises; ESG performance has a more significant effect on reducing the cost of debt capital for enterprises with high quality of internal control than for enterprises with low quality of internal control; and the effect on reducing the cost of debt capital is better for enterprises with high level of external supervision than for enterprises with low level of external supervision.

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