ESG Ratings, Corporate Productivity, and Debt Financing Costs

DOI: https://doi.org/10.62517/jse.202511418

Author(s)

Jingyun Zhang

Affiliation(s)

School of Business, East China University of Political Science and Law, Shanghai, China

Abstract

Based on panel data from Chinese listed companies between 2014 and 2020, this study examines the specific impact of ESG performance on debt financing. The findings reveal that: First, an improvement in ESG ratings significantly reduces corporate debt financing costs, a facilitating mechanism that has passed robustness and endogeneity tests. Second, mediation effect tests indicate that ESG can effectively lower financing costs by enhancing corporate productivity. Furthermore, heterogeneity analysis shows that strong ESG performance has a more pronounced cost-reducing effect for non-state-owned enterprise and high-tech companies. These results indicate that companies need to prioritize and transparently disclose ESG ratings, governments should establish stringent and standardized ESG policies, and investors should incorporate ESG metrics into their investment considerations.

Keywords

ESG; Debt Financing Costs; Corporate Productivity

References

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