Research On The Impact Of ESG Ratings Of Listed Companies On Debt Financing Cost

With the proposal of "carbon neutrality" and "carbon peaking" in 2020,the realization of sustainable development goals through economic means has received increasing attention.For this reason,creditors increasingly pay attention to non-financial information related to the sustainable development of listed companies,and regard it as an important basis for investment decisions.Important information about enterprises in environmental protection,social responsibility fulfillment and corporate governance will help creditors to carry out loan business under the guidance of national green finance policies and improve the quality of credit assets.In this context,ESG ratings will play an important role in facilitating credit resource allocation to achieve sustainable development.Existing literature explores the influencing factors of debt financing cost from the perspective of ESG performance and disclosure of listed companies,but few literature explores the impact on debt financing cost from the quantitative ESG rating issued by third-party financial institutions.ESG information is the non-financial information that reflects the sustainable development ability of enterprises,which can reduce the information risks of enterprises faced by creditors.However,different from the ESG behavior information disclosed by companies themselves,ESG ratings are market indicators assessed by financial institutions based on a combination of non-public(ESG report,research,and interview)and public information,so thus provide more complete information.It is worth noting that,in practice,creditors will consider ESG factors in their loan pricing.Further,investors pay attention to the basic characteristics and behaviors of loan enterprises when making loan pricing decisions.Will a higher ESG rating help to send positive signals to investors in the debt financing market,thus reducing the risk compensation that investors claim?To solve the above the problem,I uses A-share listed companies from 2016 to 2021 as the research object to explore the impact of ESG rating on debt financing costs,and discusses the impact effect of information asymmetry as a mechanism.The results show that:(1)When other conditions remain unchanged,the higher the ESG rating of the listed company,the lower its debt financing cost,and the conclusion is still valid after a series of robustness tests and endogeneity processing.(2)Mechanism test shows that ESG rating reduces the degree of information asymmetry and thus affects the cost of debt financing.(3)When an enterprise performs worse in the three dimensions of E,S and G,the higher the ESG rating of the listed company,the lower its debt financing cost.(4)In non-state-owned enterprises,low degree of banking competition and market-oriented regions,the higher the ESG rating of listed companies,the lower the cost of debt financing.From the theoretical point of view,this paper is based on the emerging economies of China to carry out ESG rating impact research,helpful to develop ESG ratings literature under the new spatial background.From the perspective of practice,this paper studies the cost of corporate debt financing from the perspective of ESG rating,which is helpful for companies to pay more attention to the impact of market evaluation information on their non-financial activities on their finances.