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Corporate social responsibility, green financial system guidelines, and cost of debt financing: Evidence from pollution‐intensive industries in China

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  • Yuanhui Li
  • Rongrong Chen
  • Erwei Xiang

Abstract

Using a sample of publicly listed firms from 2014 to 2019 in pollution‐intensive industries in China, this study investigates the effect of corporate social responsibility (CSR) on corporate cost of debt financing and how the issuance of the “Green Financial System Guidelines” moderates the above relationship. We find that high CSR performance (including responsibility for shareholders, employees, suppliers and customers, the environment, and the community) is associated with low cost of debt in polluting companies. Moreover, the “Green Financial System Guidelines” strengthens the role of CSR in reducing corporate cost of debt. Further analyses reveal that CSR reduces cost of debt by reducing information asymmetry and business risk, and that green credit development strengthens the role of CSR in reducing corporate cost of debt. Our baseline results are robust to alternative measures and tests that address potential endogeneity concerns by employing the Heckman two‐stage and propensity score matching (PSM) methods.

Suggested Citation

  • Yuanhui Li & Rongrong Chen & Erwei Xiang, 2022. "Corporate social responsibility, green financial system guidelines, and cost of debt financing: Evidence from pollution‐intensive industries in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 593-608, May.
    • Handle: RePEc:wly:corsem:v:29:y:2022:i:3:p:593-608
    DOI: 10.1002/csr.2222
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    2. Xiangrong Wan & Fanghui Pan & Chenyang Liu & Jing Zhao & Cuixia Li, 2024. "The Impact of Profitability Sustainability on Innovation in Dairy Companies: The Multiple Moderating Effects of Corporate Social Responsibility," Sustainability, MDPI, vol. 16(14), pages 1-25, July.
    3. Khayria Amarna & Raquel Garde Sánchez & Maria Victoria López‐Pérez & Mahmoud Marzouk, 2024. "The effect of environmental, social, and governance disclosure and real earning management on the cost of financing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3181-3193, July.
    4. Zhang, Yutian & He, Yu, 2024. "How does the green financial system affect environmentally friendly firms' ESG? Evidence from Chinese stock markets," Energy Economics, Elsevier, vol. 130(C).
    5. Qian, Shuitu & Yu, Wenzhe, 2024. "Green finance and environmental, social, and governance performance," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1185-1202.
    6. Pei Xu & Penghao Ye & Atif Jahanger & Siwei Huang & Fan Zhao, 2023. "Can green credit policy reduce corporate carbon emission intensity: Evidence from China's listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2623-2638, September.
    7. Yuanyuan Li & Yindan Zhang & Yasir Ahmed Solangi, 2023. "Assessing ESG Factors and Policies of Green Finance Investment Decisions for Sustainable Development in China Using the Fuzzy AHP and Fuzzy DEMATEL," Sustainability, MDPI, vol. 15(21), pages 1-23, October.
    8. Wu, Junfeng & Liu, Baohua & Chang, Samuel & Chan, Kam C., 2022. "Effects of air pollution on accounting conservatism," International Review of Financial Analysis, Elsevier, vol. 84(C).

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