The Impact of ESG Ratings on Corporate Debt Financing Costs: A Cross-Regional Comparison of the European Union, the United States, and China
DOI:
https://doi.org/10.54097/syg22m93Keywords:
ESG; Cost of Debt Financing; Cross-Regional Comparison.Abstract
This study aims to explore how the environmental, social and governance (ESG) performance of enterprises affects their debt financing costs, and to conduct a cross-regional comparative analysis of the European Union (EU), the United States (US), and China from the perspectives of policies, markets, and mechanisms. Research has found a significant negative correlation between ESG performance and the cost of corporate debt financing. Specifically, the European Union, with its strict and precise rule-oriented regulation and mature ESG market system, has the strongest inhibitory effect of ESG on debt costs; the United States, due to the differentiation of federal and state-level regulation, highly politicized market, and rating differences, has a slightly weaker impact of ESG; China's ESG market is still in its early stage of development, characterized by policy-driven approaches. The impact of ESG on debt costs mainly manifests in the availability of financing and interest rate discounts, and its overall intensity is weaker than the former two. This study can provide reference for the improvement of China's ESG market and corporate debt financing decisions.
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