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Corporate ESG performance and trade credit financing – Evidence from China

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  • Luo, Chunhua
  • Wei, Dianlong
  • He, Feng

Abstract

This paper explores the impact of firms' comprehensive ESG (environmental, social, and governance) ratings on their trade credit financing in the Chinese market. Using a sample of publicly listed companies from 2011 to 2019, we find that corporate ESG performance could significantly increase a firm's access to trade credit. These results still hold after a series of robustness checks. Furthermore, ESG increases a firm's trade credit by mitigating information asymmetry, improving operating efficiency and reducing risk. Our study provides general implications to encourage firms to participate in ESG in the current carbon emission transition period.

Suggested Citation

  • Luo, Chunhua & Wei, Dianlong & He, Feng, 2023. "Corporate ESG performance and trade credit financing – Evidence from China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 337-351.
    • Handle: RePEc:eee:reveco:v:85:y:2023:i:c:p:337-351
    DOI: 10.1016/j.iref.2023.01.021
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