Environmental Information Disclosure,Credit Rating And Bond Financing Costs

Currently,China’s economy is entering a new stage of high-quality development,which places greater emphasis on sustainable environmental development.Against this backdrop,demands for corporate environmental and social responsibility have become increasingly stringent,and the value of environmental information is becoming more prominent.On one hand,environmental information disclosure has become a crucial measure and mechanism for enterprises to achieve environmental sustainability,and is highly valued by stakeholders such as the government,investors,and the general public.On the other hand,corporate behavior in the environmental field is directly related to legal and regulatory risks,which will be transmitted through a company’s cash flow to its debt default risk,and ultimately affect its credit rating.However,few scholars in the current academic field have explored the relationship between environmental information disclosure,corporate credit ratings,and bond financing costs,and have not paid attention to the impact of peer environmental information disclosure on credit ratings and bond financing costs of bond-issuing companies.Therefore,studying the impact of peer environmental information disclosure on the credit rating and bond financing costs of bond-issuing companies has both theoretical and practical significance in the context of increasing requirements for environmental information disclosure in China..This paper focuses on the corporate bonds issued by listed companies in China and analyzes the relationship between peer environmental information disclosure,corporate credit ratings and bond financing costs based on the theories of synchronous and competitive effects.Using a sample of corporate bonds issued by A-share listed companies between 2011 and 2021,this study employs various empirical methods including multiple linear regression,ordered probit regression,group regression,propensity score matching,difference-in-difference method and instrumental-variable method to examine the impact of peer environmental information disclosure on corporate credit ratings and bond financing costs.Additionally,the study investigates the moderating effects of internal and external factors,such as heavy pollution industry attributes and industrial competition levels.Furthermore,this paper innovatively explores the specific mechanisms through which peer environmental information disclosure affects corporate credit ratings from the perspectives of default risk and earnings quality.The main conclusions of this study are as follows: Firstly,there is a negative correlation between peer environmental information disclosure and credit rating of the issuer,and peer environmental information disclosure has a positive impact on the bond financing costs through the intermediary effect of the issuer’s credit rating.That is,the higher the level of peer environmental information disclosure,the higher the financing cost of bond-issuing companies.Secondly,in terms of impact mechanisms,peer environmental information disclosure can convey information related to corporate default risk and earnings quality.Specifically,a higher level of peer environmental information disclosure is associated with higher default risk and poorer earnings quality for bond-issuing companies,which in turn leads to a decrease in their corporate credit ratings and an increase in bond financing costs..Thirdly,in terms of moderating effects,the negative correlation between peer environmental information disclosure and corporate credit ratings,as well as the positive correlation between peer environmental information disclosure and bond financing costs,are more pronounced in heavy pollution industries and industries with lower levels of competition.Based on these findings,the paper provides relevant recommendations from the perspectives of credit rating agencies,government regulatory agencies,and corporate managers.