Study on the Nonlinear Impact of Corporate ESG Ratings on Debt Financing Costs
Abstract
of listed companies from 2010 to 2023. The study yields the following findings: First, the relationship between corporate ESG ratings
and debt financing exhibits an inverted U-shaped pattern. Specifically, when firms with relatively low ESG ratings improve their ratings, they initially experience an increase in debt financing costs followed by a subsequent decrease. However, the inflection point occurs at an ESG rating level of 0.248623, which is attained by only a minority of firms. For the majority of enterprises, enhanced ESG
ratings consistently correlate with reduced debt financing costs. Second, the reduction of information asymmetry and the promotion
of corporate digital transformation are identified as critical mechanisms through which ESG ratings mitigate corporate debt financing
costs. Finally, the cost-reducing effect of ESG ratings on debt financing is more pronounced in non-high-carbon industries compared to
their high-carbon counterparts.
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DOI: http://dx.doi.org/10.70711/frim.v3i10.7532
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