How do ESG controversies moderate the nexus between ESG performance and cost of capital? Evidence from European listed companies

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

How do ESG controversies moderate the nexus between ESG performance and cost of capital? Evidence from European listed companies

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

How do ESG controversies moderate the nexus between ESG performance and cost of capital? Evidence from European listed companies

Popis výsledku anglicky

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.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

—

Návaznosti

S - Specificky vyzkum na vysokych skolach

Rok uplatnění

2024

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

MANAGERIAL FINANCE

ISSN

0307-4358

e-ISSN

1758-7743

Svazek periodika

50

Číslo periodika v rámci svazku

10

Stát vydavatele periodika

GB - Spojené království Velké Británie a Severního Irska

Počet stran výsledku

20

Strana od-do

1727-1746

Kód UT WoS článku

001280862100001

EID výsledku v databázi Scopus

2-s2.0-85200054627