ESG and cost of debt
Abstract/Contents
- Abstract
- This paper studies the extent to which ESG (environmental, social, and governance) performance is priced into corporate loans. I construct a firm-specfic ESG measure from 136 raw metrics related to the fundamentals of ESG components. The constructed ESG scores provide measurement transparency and exclude all traditional corporate governance factors that have been established to exert financial impact on firms. Through identification within lender-borrowers persistent relationships over time, I find that a one standard deviation increase in a borrowing companys ESG score leads to a 6.3 basis-point decrease in its loan spread. The reduction in loan spread can be explained through the credit risk channel, where highly rated ESG companies have a 4% lower default probability in the future. Better rm ESG scores also predict fewer financial restatements due to fraud, clerical error, and SEC investigation.
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource. |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2021; ©2021 |
| Publication date | 2021; 2021 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Zhang, Rebecca Lan |
|---|---|
| Degree supervisor | Seru, Amit |
| Thesis advisor | Seru, Amit |
| Thesis advisor | Buchak, Greg |
| Thesis advisor | Krishnamurthy, Arvind |
| Thesis advisor | Robles Garcia, Claudia |
| Degree committee member | Buchak, Greg |
| Degree committee member | Krishnamurthy, Arvind |
| Degree committee member | Robles Garcia, Claudia |
| Associated with | Stanford University, Graduate School of Business |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Rebecca Zhang. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis Ph.D. Stanford University 2021. |
| Location | https://purl.stanford.edu/tm534xm3595 |
Access conditions
- Copyright
- © 2021 by Rebecca Lan Zhang
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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