The Impact of Environmental Information Disclosure on the Cost of Debt: Evidence From China

Abstract

With the growing attention the public has paid to environmental issues, environmental disclosure is not only a vital means for firms to convey social responsibility but also an important information source for lending institutions to assess the credit risk of firms. Based on the data of listed companies in China from 2007 - 2016, this paper applies a two-way fixed effects model to determine the impact of environmental information disclosure on the cost of debt. It reveals that environmental information disclosure could decrease companies’ cost of debt and that CEO duality and ownership concentration play vital roles in this relationship to some extent. After considering endogenous problems and testing the robustness, the conclusions still prove to be valid.