Corporate social responsibility, investor protection, and the cost of equity: Evidence from East Asia

Wang, Kun Tracy; Kartika, Fiki; Wang, Wanbin Walter; Luo, Guqiang

doi:10.1016/j.ememar.2021.100801

Cited by 38 publications

(15 citation statements)

References 75 publications

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“…The initial screening shows a positive and significant relationship between CSRD and the cost of financing (both COD and COE), which suggests an increase in CSRD leads to an increase in the cost of financing. The result is consistent with the findings of prior studies (Gonçalves et al, 2022; Ng & Rezaee, 2015; Wang et al, 2021). Further, the coefficient of correlation between all explanatory variables stands below 0.5.…”

Section: Analysis and Discussionsupporting

confidence: 93%

Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

Gupta,

Das

2024

Manage Decis Econ

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This study investigates the relationship between corporate social responsibility disclosure (CSRD) and the cost of financing for firms in emerging economies. Results show that CSRD initially reduces the cost of equity financing but increases equity costs beyond a certain threshold. Firms should weigh the trade‐offs of signal cost and benefits when choosing financing strategies. Moreover, investors in the debt market perceive a higher level of board independence as less risky, which consequently has a negative impact on the relationship between CSRD and the cost of debt. Thus, companies should streamline their CSR disclosures to reduce their cost of capital.

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Section: Analysis and Discussionsupporting

confidence: 93%

Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

Gupta,

Das

2024

Manage Decis Econ

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“…A country's institutional environment has a tremendous and multifaceted impact on the corporate landscape. Numerous studies have demonstrated how factors such as a country's level of investor protection and regulatory enforcement framework act as moderators, influencing the interplay among various aspects of the business environment (Francis and Wang, 2008;Martínez-Ferrero et al, 2015;El Ghoul et al, 2016;Li et al, 2017;García-S anchez et al, 2018;Alam et al, 2020;Yuan and Zhang, 2020;Wang et al, 2021;Jin et al, 2022).…”

Section: Moderating Influence Of Country-level Investor Protection An...mentioning

confidence: 99%

Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

Dua,

Sharma

2024

JIBR

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Purpose The mounting focus on environmental, social and governance (ESG) factors in business has sparked substantial curiosity in understanding the nexus between ESG and the companies’ strategic decisions. This study aims to investigate the influence of firms’ ESG disclosure scores on their dividend payout. Furthermore, it examines the nuanced dynamics of this relationship by exploring the moderating role of the country’s investor protection regulations and regulatory enforcement. Design/methodology/approach This study uses pooled ordinary least square regression with year, industry and country effects. It analyzes a balanced panel data set of 192 non-financial firms drawn from the primary equity indices of BRICS nations. This study examined the data of six years spanning 2015–2020. Findings The findings discover a significantly positive relationship between ESG scores and dividend payout ratio, conveying that firms with higher ESG scores allocate more of their profits as dividends. Furthermore, the finding reveals that country-level robust investor protection and effective regulatory enforcement mechanisms undermine the positive association between ESG ratings and payouts of dividends, suggesting that the ESG disclosure of firms operating in a setting characterized by enhanced investor safeguards and stricter regulatory oversight will exert less influence on their dividend decisions. Originality/value To the best of the authors’ knowledge, this is the first study to concentrate on the ESG–dividend nexus in the BRICS countries. Furthermore, this study used each country’s investor protection index and regulatory enforcement scores to comprehend the influence of country-level legal frameworks in shaping the relationship between ESG and dividend decisions, thus adding value to the existing literature on corporate sustainability.

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“…To address this concern, we employ a Heckman-type treatment effects model (Heckman, 1979) by adopting a Probit model to estimate the likelihood of firms issuing voluntary MEFs in the first stage, and then adding the estimated likelihood (LAMBDA_VOLMEF) to the second-stage regression model to account for factors that may influence the disclosure decision. Specifically, in the first-stage Probit model, we include the firm-level control variables used in our main analysis, together with two instrumental variables, IND_VOLMEF% and YEAR_VOLMEF%, in the same spirit of Cheng et al (2014) and Wang et al (2021). IND_VOLMEF% is the percentage of firms in the industry (excluding the firm itself) that have issued voluntary management earnings forecasts, and YEAR_VOLMEF% is the percentage of firms in a given year (excluding the firm itself) that issue voluntary management earnings forecasts.…”

Section: Treatment Effect Modelmentioning

confidence: 99%

“…(2014) and Wang et al . (2021) . IND_VOLMEF % is the percentage of firms in the industry (excluding the firm itself) that have issued voluntary management earnings forecasts, and YEAR_VOLMEF% is the percentage of firms in a given year (excluding the firm itself) that issue voluntary management earnings forecasts 20 .…”

Section: Robustness Testsmentioning

confidence: 99%

Conditional Mandates on Management Earnings Forecasts: The Impact on the Cost of Debt

Wang

Zhu

2023

Abacus

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Exploiting a unique conditional disclosure mandate on management earnings forecasts (MEFs) in China, we examine the differential effects of voluntary and mandatory MEFs on the cost of debt. We find that firms providing voluntary MEFs have lower cost of debt than do mandatory forecasters and nonforecasters. The results of the channel analyses reveal that voluntary forecasters have greater commitment to voluntary MEFs in future periods than do mandatory forecasters and nonforecasters, and the precision, accuracy, and timeliness of MEFs are higher for voluntary forecasters than for mandatory forecasters. Additional analyses show that the differential effects of voluntary and mandatory MEFs on cost of debt are stronger for voluntary forecasters operating in opaque information environments, issuing high‐quality and confirming forecasts, controlled by private shareholders, and operating in highly competitive product markets. Overall, our results indicate that, compared with mandatory MEFs, voluntary MEFs are more informative for credit investors, particularly for firms facing greater information risk and operating uncertainty.

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Corporate social responsibility, investor protection, and the cost of equity: Evidence from East Asia

Cited by 38 publications

References 75 publications

Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

Navigating the trade‐off between corporate social responsibility disclosure and the cost of financing: Evidence from BRICS economies

Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

Conditional Mandates on Management Earnings Forecasts: The Impact on the Cost of Debt

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