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Is ESG the key to unlock debt financing during the COVID-19 pandemic? International evidence

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  • Srivastava, Jagriti
  • Sampath, Aravind
  • Gopalakrishnan, Balagopal

Abstract

In this article, we examine whether stakeholder engagement impacts firms’ ability to raise debt during the COVID-19 pandemic. Using firm-level data from 51 countries, we find that firms with greater stakeholder engagement obtain higher debt financing during the COVID-19 pandemic. This effect is more pronounced for riskier firms, highlighting the importance of maintaining relationships with stakeholders. Moreover, we find that stakeholder engagement facilitates higher debt financing for less asset-intensive firms and firms in emerging economies. Our empirical analysis reinforces the role of firms’ stakeholder engagement in mitigating the adverse impact of economic shocks.

Suggested Citation

  • Srivastava, Jagriti & Sampath, Aravind & Gopalakrishnan, Balagopal, 2022. "Is ESG the key to unlock debt financing during the COVID-19 pandemic? International evidence," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003488
    DOI: 10.1016/j.frl.2022.103125
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    Cited by:

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    2. Zhao, Wenjia & Liang, Yiyan & Li, Pan, 2023. "Can enterprises' participation in targeted poverty alleviation reduce the cost of debt financing? Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    3. Wang, Haijun & Jiao, Shuaipeng & Bu, Kun & Wang, Yebin & Wang, Yaxian, 2023. "Digital transformation and manufacturing companies’ ESG responsibility performance," Finance Research Letters, Elsevier, vol. 58(PB).
    4. Wu, Hua & Zhang, Ke & Li, Renyu, 2024. "ESG score, analyst coverage and corporate resilience," Finance Research Letters, Elsevier, vol. 62(PB).
    5. Huang, Jun & Li, Yun & Han, Feifei, 2024. "Walk well and talk well: Impact of the consistency of ESG performance and disclosure on firms’ stock price crash risk," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1154-1174.
    6. Liping Wang & Zhijia Wang & Lili Tian & Chuang Li, 2022. "Evolutionary Game and Numerical Simulation of Enterprises’ Green Technology Innovation: Based on the Credit Sales Financing Service of Supply Chain," Sustainability, MDPI, vol. 15(1), pages 1-25, December.

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    More about this item

    Keywords

    CSR; ESG; Stakeholder; COVID-19; Debt financing;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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