The Impact of ESG Performance on Corporate Debt Financing Costs: Empirical Evidence from Chinese A-Share Listed Companies
(2025) BUSN79 20251Department of Business Administration
- Abstract
- Purpose: This study explores the impact of ESG performance on corporate debt financing costs in Chinese A-share listed companies. It investigates the underlying mechanisms and heterogeneity across ownership, region, and industry.
Methodology: Using panel data of 33,830 firm-year observations from 2011 to 2023, the study applies fixed effects regression models. ESG performance is measured by the Huazheng ESG rating, and financing cost is proxied by financial expenses over total liabilities. Endogeneity and mediation effects are tested using instrumental variables and two-step regressions.
Theoretical perspectives: The study draws on stakeholder theory, information asymmetry theory, and signaling theory to explain how ESG performance... (More) - Purpose: This study explores the impact of ESG performance on corporate debt financing costs in Chinese A-share listed companies. It investigates the underlying mechanisms and heterogeneity across ownership, region, and industry.
Methodology: Using panel data of 33,830 firm-year observations from 2011 to 2023, the study applies fixed effects regression models. ESG performance is measured by the Huazheng ESG rating, and financing cost is proxied by financial expenses over total liabilities. Endogeneity and mediation effects are tested using instrumental variables and two-step regressions.
Theoretical perspectives: The study draws on stakeholder theory, information asymmetry theory, and signaling theory to explain how ESG performance influences creditor perceptions and financing outcomes.
Empirical foundation: The analysis is based on fixed effects regressions, instrumental variable tests, and mediation models, using large-scale panel data from Chinese A-share firms.
Conclusions: The findings show that higher ESG performance is significantly associated with lower debt financing costs. This effect is partially mediated by reduced financing constraints and greater analyst attention. The cost-reducing effect is more pronounced in non-state-owned firms, firms in developed regions, and non-polluting industries, with Social and Governance dimensions showing the strongest influence. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9198206
- author
- Zhu, Chuchu LU and Zhong, Zhengrui LU
- supervisor
- organization
- course
- BUSN79 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- ESG performance, debt financing costs, Chinese A-share firms, financing constraints, analyst attention.
- language
- English
- id
- 9198206
- date added to LUP
- 2025-06-13 10:00:46
- date last changed
- 2025-06-13 10:00:46
@misc{9198206,
abstract = {{Purpose: This study explores the impact of ESG performance on corporate debt financing costs in Chinese A-share listed companies. It investigates the underlying mechanisms and heterogeneity across ownership, region, and industry.
Methodology: Using panel data of 33,830 firm-year observations from 2011 to 2023, the study applies fixed effects regression models. ESG performance is measured by the Huazheng ESG rating, and financing cost is proxied by financial expenses over total liabilities. Endogeneity and mediation effects are tested using instrumental variables and two-step regressions.
Theoretical perspectives: The study draws on stakeholder theory, information asymmetry theory, and signaling theory to explain how ESG performance influences creditor perceptions and financing outcomes.
Empirical foundation: The analysis is based on fixed effects regressions, instrumental variable tests, and mediation models, using large-scale panel data from Chinese A-share firms.
Conclusions: The findings show that higher ESG performance is significantly associated with lower debt financing costs. This effect is partially mediated by reduced financing constraints and greater analyst attention. The cost-reducing effect is more pronounced in non-state-owned firms, firms in developed regions, and non-polluting industries, with Social and Governance dimensions showing the strongest influence.}},
author = {{Zhu, Chuchu and Zhong, Zhengrui}},
language = {{eng}},
note = {{Student Paper}},
title = {{The Impact of ESG Performance on Corporate Debt Financing Costs: Empirical Evidence from Chinese A-Share Listed Companies}},
year = {{2025}},
}