How do ESG controversies moderate the nexus between ESG performance and cost of capital? Evidence from European listed companies
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F24%3A00135208" target="_blank" >RIV/00216224:14560/24:00135208 - isvavai.cz</a>
Result on the web
<a href="http://dx.doi.org/10.1108/MF-12-2023-0762" target="_blank" >http://dx.doi.org/10.1108/MF-12-2023-0762</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1108/MF-12-2023-0762" target="_blank" >10.1108/MF-12-2023-0762</a>
Alternative languages
Result language
angličtina
Original language name
How do ESG controversies moderate the nexus between ESG performance and cost of capital? Evidence from European listed companies
Original language description
This study aims to investigate the effect of ESG controversies and their moderating role in ESG performance and the cost of equity and overall, short-term and long-term debt capital relationship in European listed companies. The study employs two-way fixed effects panel linear regression models on the balanced longitudinal dataset of 231 European non-financial companies listed in the MSCI Europe Index in 2017–2022. To check the robustness, the study utilises the fixed effects logistic regression models with heteroskedasticity-consistent standard errors. The study reveals the significant effect of ESG performance (negative) and ESG controversies (negative) on the cost of debt capital and the substantial moderating effect of ESG controversies (positive). Additionally, it provides empirical evidence of the crossover moderating effect of ESG controversies in ESG performance and cost of equity relationship. To the best of the authors' knowledge, this is the first study to comprehensively investigate the influence of ESG controversies and their moderating effect in the context of the equity and debt capital cost for European listed companies. The findings contribute to corporate practice and empirically support legitimacy and stakeholder theories. Companies can utilise the results to proactively enhance their internal policies and behaviour to align with ESG practices and avoid ESG controversies, which will translate into reduced equity capital costs for shareholders and a lower cost of debt capital charged by creditors.
Czech name
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Czech description
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Classification
Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50206 - Finance
Result continuities
Project
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Continuities
S - Specificky vyzkum na vysokych skolach
Others
Publication year
2024
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
MANAGERIAL FINANCE
ISSN
0307-4358
e-ISSN
1758-7743
Volume of the periodical
50
Issue of the periodical within the volume
10
Country of publishing house
GB - UNITED KINGDOM
Number of pages
20
Pages from-to
1727-1746
UT code for WoS article
001280862100001
EID of the result in the Scopus database
2-s2.0-85200054627