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The Non-Linear Relationship Between ESG Performance and Corporate Financing Costs: Evidence from China's A-Share Listed Companies
- 1 Tongji University
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Abstract
This study investigates the non-linear relationship between Environmental, Social, and Governance (ESG) performance and corporate financing costs among China’s A-Share listed companies. Utilizing panel data from 2015 to 2022, the research employs quadratic regression models to explore how varying levels of ESG performance influence debt and equity financing costs. Results reveal a U-shaped relationship: initial improvements in ESG performance reduce financing costs by mitigating risks and enhancing reputation, but beyond a threshold, excessive ESG investments lead to higher costs due to diminishing returns and operational complexities. The findings highlight the importance of optimizing ESG strategies for firms and policymakers in China’s evolving regulatory landscape.
Keywords
ESG performance, Corporate financing costs, Non-linear relationship, A-Share listed companies, China
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Cite this article
Wang,W. (2025). The Non-Linear Relationship Between ESG Performance and Corporate Financing Costs: Evidence from China's A-Share Listed Companies. Journal of Economic and Managerial Dynamics,1(1),8-15.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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