Environmental Information Disclosure, Internal Control And The Cost Of Debt

With the rapid development of the economy and the concept of "green development",environmental pollution has gradually become an important issue that cannot be ignored in China's economic development.The main cause of environmental pollution is the emission of pollutants during the production process of industrial enterprises.In order to implement the construction of ecological civilization,in recent years,the Chinese government has issued a series of environmental protection policies,strengthened the supervision of polluting enterprises,clarified the social responsibility of heavily polluting companies and forced them to disclose environmental accounting information.The economic consequences have become a hot topic in academia.Debt financing is one of the important financing methods for Chinese enterprises.As an external stakeholder of the enterprise,creditors have begun to pay attention to the environmental performance and potential environmental risks.For example,after the “Green Credit” policy was introduced,banks raised the threshold for corporate loans and made the implementation of corporate environmental responsibility an important prerequisite for credit approval.On the one hand,the high-level disclosure of environmental information by enterprises can alleviate the degree of information asymmetry with creditors,and then can reduce the risk compensation caused by uncertainty about the environmental risks,on the other hand,it can send a signal that the company implements national policies,fulfills environmental responsibility,and has low environmental risks,forming a good social reputation.Through these two paths,creditors are more willing to lend funds to companies with high levels of environmental information disclosure at a more favorable interest rate.As China has not yet established a complete environmental rating system,creditors want to objectively assess the environmental performance of enterprises,mainly based on environmental information disclosed in annual reports or social responsibility reports.The reliability of the accounting information transmitted by the company to the outside is closely related to whether it has good internal control.Therefore,this paper introduces the variable of internal control,and believes that good internal control is an important prerequisite for implementing environmental information disclosure policies and ensuring the authenticity of corporate environmental accounting information,which can reflect the company's strong risk control capabilities and stable financial status.Creditors have more confidence in the environmental accounting information disclosed by such companies,and also recognize their ability to prevent environmental risks,thereby relaxing the requirements for corporate debt financing and reducing debt costs.Therefore,this paper further studies the moderating effect of internal control in the relationship between environmental information disclosure level and debt costs.From the above,this paper explores the relationship between the level of environmental information disclosure and debt costs,the correlation between internal control and debt financing costs,and the impact of internal control on the relationship between environmental information disclosure level and debt financing costs.This article firstly conducts a theoretical analysis based on the information asymmetry theory,signal transmission theory,stakeholder theory and principal-agent theory,and then selects the effective data of listed companies in the chemical industry from 2014 to 2018 as samples,uses Stata15 to process the data and verify the relevant relationships.By collecting data and making empirical analysis,this paper draws the following conclusions.For chemical industry,the level of environmental information disclosure can significantly reduce the debt cost of enterprises.This relationship is pronounced in private enterprises,but not in state-owned enterprises,and is more pronounced in companies located in areas with high marketization degree than companies located in areas with low marketization degree.Then the higher the quality of company's internal control,the lower the debt cost,and the internal control will regulate the relationship between the level of environmental information disclosure and the cost of debt financing,that is,the higher the quality of internal control,the stronger the negative correlation between the level of environmental information disclosure and the cost of debt financing.The research in this article is not limited to discuss the relationship between environmental information disclosure,internal control,and the cost of debt.It also explores the moderating effect of internal control through theoretical analysis and empirical testing.It provides guidance for chemical enterprises to reduce the cost of debt financing by using the synergy of environmental information disclosure and internal control.