Cost of debt financing, stock returns, and corporate strategic ESG disclosure
Evidence from China
Bibliographic Data
| ID | 21259322 |
|---|---|
| Authors | Wenjiao Wang (0000-0003-2637-2016, School of Economics and Management China University of Mining and Technology Xuzhou China), Wang Wenjiao (0009-0009-9102-0608, China University of Mining and Technology), Ziyuan Sun (0000-0003-3669-0341, China University of Mining and Technology, corresponding author), Yuting Dong (0000-0002-8785-9314, China University of Mining and Technology), Longyu Zhang (0009-0003-4813-7524, China University of Mining and Technology) |
| Year | 2025 |
| Volume | 34 |
| Issue | 4 |
| Pages | 1787-1812 |
| Publication date | 2025-10-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Business Ethics, the Environment & Responsibility (JOURNAL) |
| Journal identifiers | ISSN: 2694-6416 • E-ISSN: 2694-6424 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/beer.12741 |
| OpenAlex | W4402379207 |
| Language | EN |
| Citations received | 4 |
| References cited | 134 |
Whether corporate strategic Environmental, Social, and Governance (ESG) disclosure can be effectively screened by external markets still needs more empirical support. Despite numerous studies confirming the positive impact of ESG, the issue of strategic ESG disclosure has yet to receive sufficient attention. This study examines the impact of ESG greenwashing on the cost of debt financing and stock returns using panel data of Chinese A‐share listed corporates from 2012 to 2021. The study finds that external markets fail to recognize ESG greenwashing in the short term, leading to a temporary reduction in the cost of debt financing and an increase in stock returns, but these effects are not lasting. Mechanism analysis shows that ESG greenwashing enhances corporate reputation and reduces the cost of debt financing through the reputation effect, stimulates investor sentiment, and improves stock returns through the sentiment effect. The study identifies management myopia, excessive power, financial distress, and information asymmetry as the main drivers. However, strong oversight by independent directors, involvement of Big Four audit firms, investor site visits, and high industry competition can mitigate these misleading effects. This research expands the understanding of the causes and economic consequences of corporate ESG greenwashing and provides empirical evidence for managing this phenomenon
Business · China · Corporate Finance · Debt · Debt financing · Economics · Financial system · Monetary economics · Auditing, Earnings Management, Governance · Corporate Finance and Governance · Financial Reporting and Valuation Research · Finance
Critical Success Factors and Stakeholder Influence for Environmental, Social and Governance Assessment and Reporting
An Innovative Decision‐Making Model for Alternative Regulatory Frameworks Based on Sustainable Development Goal Disclosure Costs
Walking the Walk or Just Talking the Talk? Corporate Climate Strategies Under Extreme Weather
The Impact of Greenwashing on Stock Price Synchronicity
The Drivers of Greenwashing
Effects of greenwashing on financial performance
Financial Ratios and the Probabilistic Prediction of Bankruptcy
Stakeholder legitimacy in firm greening and financial performance
Do investors care about carbon risk?
Greenwashing and environmental communication
Walking the talk about corporate social responsibility communication
The Uses of Tobit Analysis
Entropy Balancing for Causal Effects
| Citations per year | 4 |
|---|---|
| Citation span | 2025 - 2026 (2) |
| Highly cited | No |