Abstract
Using a novel sample covering 3,783 U.S. public firms from 2007 to 2020, we examine how negative media coverage of firm-level Environmental, Social, and Governance (ESG) practices affects a firm’s debt choice. We find that firms with higher ESG reputation risk rely more on public bond than bank loan. The Social and Governance components, in particular, matter. Moreover, firms that receive more negative news coverage display a higher propensity to issue new bonds as opposed to securing new bank debt. Overall, our study presents empirical evidence on the relation between firm ESG reputation risk and debt financing.
| Original language | English |
|---|---|
| Pages (from-to) | 2071-2094 |
| Number of pages | 24 |
| Journal | European Financial Management |
| Volume | 30 |
| Issue number | 4 |
| Early online date | 8 Nov 2023 |
| DOIs | |
| Publication status | Published - 30 Sept 2024 |
Data Availability Statement
Data is subject to third-party restrictions. The data that support the findings of this study are available from several databases of S&P Capital IQ, Refinitiv Eikon, WRDS Dealscan, and Reprisk. Restrictions apply to the availability of these data, which were used under license for this study. Data are available from the authors with the permission of Capital IQ, Refinitiv Eikon and RepriskKeywords
- ESG reputation risk
- capital structure
- debt choices
- debt structure
- information asymmetry
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Accounting