Do ESG scores have incremental information value on the primary bond market?——evidence from China

Abstract

ESG scores are essential information tools in the capital market, but prior study has not fully discussed the effect and internal mechanism of ESG scores on bond investors’ risk pricing in the primary market. The purpose of this study is to investigate the relationship between the ESG scores and risk premium of bond issuance based on the sample of Chinese listed corporations. We find that when ESG scores of the bond issuer are higher, the investors will require a lower risk premium. The result indicates that ESG scores already have positive information effect in Chinese primary bond market. Furthermore, we make mechanism and heterogeneity tests to prove that ESG scores can provide investors with incremental information, which is helpful for bond investors to identify risks and price effectively. Our study in the context of the emerging economy of China examines the incremental information value of ESG scores for bond investors, and provides evidence for the application of sustainable development concepts in global capital markets.

ESG and green Innovation

“…First of all, corporate ESG performance promotes the disclosure of more environmental information and improves the information transparency with stakeholders. Darnall et al (2022) [1] and An et al (2023) [2] argued that a high ESG score not only provides investors with incremental information on the current risks of enterprises, but also helps to reduce investors' expectations on the future development risks of enterprises, thus reducing information asymmetry. Secondly, corporate ESG performance can reduce the cost of debt financing and equity financing by reducing the information asymmetry with creditors and equity holders.…”

Desempenho Esg, Risco E a (In)existência Do Comitê De Risco Nas Empresas Brasileiras

“…O desempenho ESG é avaliado a partir da pontuação atribuída aos aspectos ambientais, sociais e de governança de uma organização. As pontuações ESG refletem não apenas a importância que a empresa atribui ao desempenho ambiental, social e de governança no processo de desenvolvimento, mas também expressam o nível de desenvolvimento prático desses três pilares (Zhang, Gao, Wang, Chen, & An, 2023).…”

Auditoria Independente E Divulgação Environmental, Social and Governance (Esg)

“…Since the signing of the Paris Agreement, the concept of ESG has attracted attention from academia and society (SERAFEIM; YOON, 2022). Basic corporate quality information is most valued by investors, especially ESG scores that reflect the long-term investment value of the organization (ZHANG et al, 2023).…”