The Interactive Effect of Environmental, Social and Corporate Governance (ESG) Reporting Performance on Cost of Debt

Articles in Press

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

2 M.A. of Agricultural Economics, Faculty of Agricultural Economics, University of Tehran, Tehran, Iran

10.22103/jak.2024.23865.4085

Abstract

Purpose: The purpose of this research is to investigate the interactive effect of environmental, social and corporate governance (ESG) reporting and disclosure on the cost of debt.

Method: In this reaserch, a sample consisting of 910 company-years during the period of 2016-2022 was selected and tested from among the companies admitted to the Tehran Stock Exchange and tested based on multiple regression of research models.

Findings: The results showed that ESG disclosure leads to an increase in the cost of debt. Also, poor ESG performance is associated with lower cost of debt. In addition, the interaction between disclosure and ESG performance weakens the increase in the cost of debt. Also, environmental and social disclosure is associated with an increase in the cost of debt, and disclosure of corporate governance does not have a significant effect on the cost of debt. Among the dimensions of ESG performance, weak environmental performance and corporate governance lead to a decrease and an increase in the cost of debt, respectively.

Conclusion: These results show conflicting evidence with international studies for Iran and contribute to a deeper understanding of ESG reporting.

Contribution: Considering that the impact of ESG performance and its disclosure on the cost of debt has not been investigated in domestic research, the results of this research contribute to the enrichment of existing literature in the field of ESG.

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Main Subjects

Journal of Accounting Knowledge

Articles in Press, Accepted Manuscript
Available Online from 01 December 2024

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History

  • Receive Date: 09 August 2024
  • Revise Date: 02 October 2024
  • Accept Date: 01 December 2024

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