The Impact of ESG Performance on the Cost of Corporate Debt Financing in China's A-share Market: A Study of Listed Companies

In recent years, the swift advancement of China's economy has resulted in significant environmental and societal challenges. To harmonize economic growth with social and environmental considerations, the idea of Environmental, Social, and Governance (ESG). emerged. ESG represents a business performance across three essential aspects: capabilities in environmental stewardship, social accountability, and governance practices. Debt financing remains a primary method for companies to raise capital. Traditionally, investors focus on internal factors such as financial performance and management quality, but in recent times, non-financial information, particularly ESG performance, has gained attention as a key indicator of sustainable progress. This research examines the connection between ESG performance and the cost of corporate debt financing, utilizing a selection of A-share listed companies in China from 2010 to 2021. A bidirectional within-effects model is constructed to investigate how ESG performance affects the costs of obligation financing and the role of property rights in this relationship.