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Firm ESG reputation risk and debt choice

Newton, David P; Ongena, Steven; Xie, Ru; Zhao, Binru (2024). Firm ESG reputation risk and debt choice. European financial management, 30(4):2071-2094.

Abstract

Using a novel sample covering 3783 US public firms from 2007 to 2020, we examine how negative media coverage of firm‐level environmental, social, and governance (ESG) practices affects a firm's debt choice. We find that firms with higher ESG reputation risk rely more on public bond than bank loan. The social and governance components, in particular, matter. Moreover, firms that receive more negative news coverage display a higher propensity to issue new bonds as opposed to securing new bank debt. Overall, our study presents empirical evidence on the relation between firm ESG reputation risk and debt financing.

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Accounting
Social Sciences & Humanities > General Economics, Econometrics and Finance
Uncontrolled Keywords:capital structure, debt choices, debt structure, ESG reputation risk, information asymmetry
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 September 2024
Deposited On:09 Jan 2024 13:42
Last Modified:04 Nov 2024 13:10
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:1354-7798
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1111/eufm.12468
Other Identification Number:merlin-id:24230
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