The Impact Of ESG Disclosure On The Cost Of Corporate Equity Capital

ESG,the abbreviation of the three words of environment,social and governance,is also a significant action guide and investment concept that has emerged in recent years at the level of financial markets and physical enterprises.Although the voices of all sectors of the society for improving the performance of ESG disclosure are increasing,for enterprises,whether improving the level of ESG disclosure can achieve the common gain of their own business status and social value is the key point to consider.Therefore,in the new stage of high-quality development of China’s economy,it is of great practical significance to explore the relationship between ESG disclosure and the cost of equity capital of enterprises.Firstly,this paper makes a theoretical analysis of the relationship between ESG disclosure and the cost of equity capital of enterprises.On this basis,this paper takes China A-share listed companies in 2011-2011 as the research sample,and constructs a multiple linear regression model for empirical testing.Secondly,this paper innovatively explores the specific mechanism of the impact of ESG disclosure on the cost of equity capital of enterprises from the perspective of agency cost and market attention.In addition,according to the nature of enterprise property rights,the nature of environmental pollution and the intensity of financial supervision,this paper uses the method of group regression to analyze the heterogeneity of the above impacts.Finally,considering the mutual influence of corporate financing behavior and investment behavior,this paper further discusses the impact of ESG disclosure on corporate investment efficiency.The results show that:(1)The improvement of enterprise ESG disclosure level can significantly reduce the cost of equity capital.At the same time,in the three dimensions of environment,social and governance,efforts made by enterprises in any aspect can bring about a decline in the cost of equity capital.(2)In terms of specific mechanism,the improvement of ESG disclosure level can reduce the equity capital cost of enterprises by reducing the second type of agency cost and increasing market attention.(3)The heterogeneity analysis shows that the negative impact of the improvement of ESG disclosure level on the cost of equity capital is more obvious in non-state-owned enterprises,non-polluting enterprises and enterprises facing high financial supervision intensity.(4)The improvement of ESG disclosure level can improve the investment efficiency by alleviating the underinvestment of enterprises.Based on above conclusions,this paper proposes relevant suggestions from the aspects of government and relevant regulatory agencies,financial institutions and enterprise managers.By researching the relationship between ESG disclosure and the cost of equity capital,this paper provides some theoretical and empirical evidence for the research in relevant fields,and also provides reference value for chinese economy move towards high-quality development and solve the problems of "financing difficulty" and "financing expensiveness " of entity enterprises.