Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China
This study aims to investigate whether stockholders and creditors place a positive value on corporate social responsibility (CSR) information disclosure when making decisions about providing financing to firms, thereby influencing their investment choices. Utilizing data from the China Stock Market...
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LLC "CPC "Business Perspectives"
2024-08-01
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| Series: | Investment Management & Financial Innovations |
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| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20581/IMFI_2024_03_Pasko.pdf |
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| author | Oleh Pasko Yang Zhang Nelia Proskurina Vadym Sapych Yelyzaveta Mykhailova |
| author_facet | Oleh Pasko Yang Zhang Nelia Proskurina Vadym Sapych Yelyzaveta Mykhailova |
| author_sort | Oleh Pasko |
| collection | DOAJ |
| description | This study aims to investigate whether stockholders and creditors place a positive value on corporate social responsibility (CSR) information disclosure when making decisions about providing financing to firms, thereby influencing their investment choices. Utilizing data from the China Stock Market & Accounting Research Database (CSMAR) and HEXUN, the study analyzes CSR disclosures and financial data of 7,123 firm-year observations of A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2012 to 2020. A comprehensive methodology involving regression analysis was applied to assess the relationship between CSR quality and the cost of debt capital. Various robustness tests, including different model specifications and alternative variable measurements, were conducted to ensure the reliability and validity of the findings. The results obtained indicate that higher CSR quality significantly correlates with a lower cost of debt capital, supporting the hypothesis that improved CSR disclosure reduces perceived credit risk. However, CEO financial expertise shows a significantly positive relationship with the cost of debt capital. Furthermore, the study reveals that CSR assurance and engagement with Big 4 accounting firms do not noticeably affect the price of debt capital, whereas mandatory CSR reporting does. The findings underscore the importance of CSR quality in financial decision-making, offering valuable insights.
AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “EU Best Practice of Life Cycle Assessment, Social, Environmental Accounting and Sustainability Reporting” – 101047667-ERASMUS-JMO-2021-MODULE https://jm.snau.edu.ua/en/eu-best-practice-of-life-cycle-assessment-social-environmental-accounting-and-sustainability-reporting/ Oleh Pasko expresses sincere gratitude for the support from the Kirkland Research Program, generously provided by the Leaders of Change Foundation established by the Polish-American Freedom Foundation. |
| format | Article |
| id | doaj-art-ed2c916bdb284f2f99b888791febe649 |
| institution | Kabale University |
| issn | 1810-4967 1812-9358 |
| language | English |
| publishDate | 2024-08-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj-art-ed2c916bdb284f2f99b888791febe6492025-02-03T11:25:12ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582024-08-0121327429110.21511/imfi.21(3).2024.2320581Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in ChinaOleh Pasko0https://orcid.org/0000-0002-6275-5885Yang Zhang1https://orcid.org/0000-0002-1257-4007Nelia Proskurina2https://orcid.org/0000-0001-8674-1720Vadym Sapych3https://orcid.org/0000-0002-8192-9692Yelyzaveta Mykhailova4https://orcid.org/0000-0002-1539-1548Ph.D. in Economics, Associate Professor, Department of Applied Economics and Business, Ukrainian Catholic University, Ukraine; Department of Accounting and Taxation, Sumy National Agrarian University, UkraineLecturer, School of Economics and Management, Henan Institute of Science and Technology, China; Ph.D. Student, Department of Accounting and Taxation, Sumy National Agrarian University, UkraineDoctor of Economics, Professor, Department of Accounting and Taxation, Zaporizhzhya National University, UkraineDoctor of Economics, Associate Professor, Sumy Regional Institute of Postgraduate Pedagogical Education, UkrainePh.D. in Philology, Doctoral Student in Economics, Associate Professor, Department of Enterprise Economics and International Business, National University of Water and Environmental Engineering, UkraineThis study aims to investigate whether stockholders and creditors place a positive value on corporate social responsibility (CSR) information disclosure when making decisions about providing financing to firms, thereby influencing their investment choices. Utilizing data from the China Stock Market & Accounting Research Database (CSMAR) and HEXUN, the study analyzes CSR disclosures and financial data of 7,123 firm-year observations of A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2012 to 2020. A comprehensive methodology involving regression analysis was applied to assess the relationship between CSR quality and the cost of debt capital. Various robustness tests, including different model specifications and alternative variable measurements, were conducted to ensure the reliability and validity of the findings. The results obtained indicate that higher CSR quality significantly correlates with a lower cost of debt capital, supporting the hypothesis that improved CSR disclosure reduces perceived credit risk. However, CEO financial expertise shows a significantly positive relationship with the cost of debt capital. Furthermore, the study reveals that CSR assurance and engagement with Big 4 accounting firms do not noticeably affect the price of debt capital, whereas mandatory CSR reporting does. The findings underscore the importance of CSR quality in financial decision-making, offering valuable insights. AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “EU Best Practice of Life Cycle Assessment, Social, Environmental Accounting and Sustainability Reporting” – 101047667-ERASMUS-JMO-2021-MODULE https://jm.snau.edu.ua/en/eu-best-practice-of-life-cycle-assessment-social-environmental-accounting-and-sustainability-reporting/ Oleh Pasko expresses sincere gratitude for the support from the Kirkland Research Program, generously provided by the Leaders of Change Foundation established by the Polish-American Freedom Foundation.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20581/IMFI_2024_03_Pasko.pdfCEO financial expertisecorporate social responsibility disclosure qualitycost of debt capitalnon-financial reporting |
| spellingShingle | Oleh Pasko Yang Zhang Nelia Proskurina Vadym Sapych Yelyzaveta Mykhailova Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China Investment Management & Financial Innovations CEO financial expertise corporate social responsibility disclosure quality cost of debt capital non-financial reporting |
| title | Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China |
| title_full | Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China |
| title_fullStr | Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China |
| title_full_unstemmed | Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China |
| title_short | Can enhanced CSR quality reduce the cost of debt capital? An empirical analysis of CEO expertise and non-financial reporting practices in China |
| title_sort | can enhanced csr quality reduce the cost of debt capital an empirical analysis of ceo expertise and non financial reporting practices in china |
| topic | CEO financial expertise corporate social responsibility disclosure quality cost of debt capital non-financial reporting |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/20581/IMFI_2024_03_Pasko.pdf |
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