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ESG greenwashing and corporate debt financing costs

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  • Peng, Qian
  • Xie, Yang

Abstract

This paper empirically examines the impact of ESG "greenwashing" on corporate bond costs in China's capital market, focusing on non-financial listed companies. The study results indicate that corporate ESG "greenwashing" can lead to negative economic consequences, resulting in an increase in corporate debt financing costs. Further analysis shows that this effect is mainly concentrated in non-state-owned enterprises and small-scale enterprises.

Suggested Citation

  • Peng, Qian & Xie, Yang, 2024. "ESG greenwashing and corporate debt financing costs," Finance Research Letters, Elsevier, vol. 69(PA).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324010420
    DOI: 10.1016/j.frl.2024.106012
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    References listed on IDEAS

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    1. Baldi, Francesco & Pandimiglio, Alessandro, 2022. "The role of ESG scoring and greenwashing risk in explaining the yields of green bonds: A conceptual framework and an econometric analysis," Global Finance Journal, Elsevier, vol. 52(C).
    2. Gigante, Gimede & Manglaviti, Davide, 2022. "The ESG effect on the cost of debt financing: A sharp RD analysis," International Review of Financial Analysis, Elsevier, vol. 84(C).
    3. Chen, Jun & King, Tao-Hsien Dolly, 2014. "Corporate hedging and the cost of debt," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 221-245.
    4. Hou, Fei & Shen, Huayu & Wang, Ping & Xiong, Hao, 2023. "Signing auditors' cultural background and debt financing costs," International Review of Financial Analysis, Elsevier, vol. 87(C).
    5. Zhang, Han & Li, Yuan & Xiao, Chenlei & Wang, Xiaoyan, 2024. "Can the deregulation of market access reduce the cost of corporate debt financing: A quasinatural experiment based on the “negative list for market access” pilot project," International Review of Financial Analysis, Elsevier, vol. 91(C).
    6. Yu, Ellen Pei-yi & Luu, Bac Van & Chen, Catherine Huirong, 2020. "Greenwashing in environmental, social and governance disclosures," Research in International Business and Finance, Elsevier, vol. 52(C).
    7. Guangrui Liu & Hao Qian & Qianqian Wu & Fei Han, 2024. "Research on the masking effect of vertical interlock on ESG greenwashing in the context of sustainable Enterprise development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 196-209, January.
    8. Zhang, Dongyang, 2023. "Does green finance really inhibit extreme hypocritical ESG risk? A greenwashing perspective exploration," Energy Economics, Elsevier, vol. 121(C).
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