Drivers of the cost of capital: The joint role of non-financial metrics

Himme, Alexander; Fischer, Markus

doi:10.1016/j.ijresmar.2013.10.006

Cited by 40 publications

(40 citation statements)

References 42 publications

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“…Tolerance is increased because positive media attention can reduce the negative effect of corporate carbon risk on its environmental reputation; thus, the real reputation of private firms with different levels of positive media attention varies (Karpoff & Lott, ; Komarek, Lupi, Kaplowitz, & Thorp, ). Himme and Fischer () found that corporate reputation affects the credit decision of the debt capital market to a certain extent. Positive media reporting on the carbon reductions of private firms protects their environmental reputation and reduces their environmental pressure.…”

Section: Discussionmentioning

confidence: 99%

Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

et al. 2018

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The effect of carbon risk on the debt capital market has become increasingly prominent under carbon constraints. We use a panel regression model to examine the relationship between carbon risk and the cost of debt financing and the moderating effect of positive media attention on this relationship. Using a sample of 191 Chinese A‐share listed firms operating in high‐carbon industries covering the period 2011–15, we conduct an empirical study and find that the relationship between carbon risk and the cost of debt financing in China is a U‐shaped one. Thus, carbon risk exerts an “interval effect" on the cost of debt financing, which mainly exists in private firms rather than state‐owned firms. This relationship can be mitigated by positive media attention. Compared with private firms that receive low positive media attention, private firms with high positive media attention are more sensitive and less tolerant to environmental regulations. Our findings provide firms with practical advice on carbon risk management, particularly on improving carbon transparency and mitigating the cost of debt financing.

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Section: Discussionmentioning

confidence: 99%

Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

et al. 2018

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“…In addition, CBBE offers the potential to grow the customer base by acquiring new customers. These growth opportunities signal that the firm is capable of generating additional sales in the future that help fulfilling its liabilities (Himme & Fischer 2014). Finally, firms with strong CBBE should also be more well-known and have stronger positive quality associations (Rego et al, 2009).…”

Section: H 3 : Customer-based Brand Equity Shows a Negative Impact Onmentioning

confidence: 99%

“…To account for unobserved heterogeneity we specify the intercept in each equation to be firm specific. Specifically, we assume that the firm-specific effects follow a random distribution that we estimate (Himme & Fischer, 2014).…”

Section: Heterogeneitymentioning

confidence: 99%

The financial brand value chain: How brand investments contribute to the financial health of firms

Fischer

Himme

2017

International Journal of Research in Marketing

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“…Measuring the cost of equity capital and understanding how it can be affected by exogenous variables is crucial for both managers and investors, due to its impact on a firm's value (Kempf and Osthoff, 2007). Indeed, the higher the perceived risk, the higher the returns required by investors (Himme and Fischer, 2014). Such line of studies has also greatly focused on the differences that pricing models present between developed and emerging economies, such as Africa and the Middle East (Hearn, 2009;Hearn and Piesse, 2015;Paulo, 2011).…”

Section: Introductionmentioning

confidence: 99%

Does sustainability foster the cost of equity reduction? The relationship between corporate social responsibility (CSR) and riskiness worldwide

Salvi¹,

Petruzzella²,

Giakoumelou³

2018

Afr. J. Bus. Manage.

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The relationship between sustainable practices and a firm's financial performance is an open debate among academics, managers and investors worldwide. Despite large literature in the field of corporate social responsibility (CSR) and corporate financial performance (CFP), there is still a lack of unanimous consensus around the impact of sustainability on a firm's economic achievements. This study aims to analyse this relationship and fill some of the gaps within existing literature using two geographical samples, a European and a global one, proceeding to compare obtained results. Such analysis was performed employing an ex ante implied proxy for the cost of equity, which has been selected in order to overcome methodological weaknesses of previous studies. Results show that sustainability can reduce the cost of equity due to lower firm riskiness, as perceived by markets and investors. Geographical specificities, on the other hand, do not play a significant role. CSR practices have the potential to create a type of goodwill or moral capital for more sustainable firms that acts as protection when negative events occur, preserving shareholder value and reducing the firms' cost of equity.

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Drivers of the cost of capital: The joint role of non-financial metrics

Cited by 40 publications

References 42 publications

Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

The financial brand value chain: How brand investments contribute to the financial health of firms

Does sustainability foster the cost of equity reduction? The relationship between corporate social responsibility (CSR) and riskiness worldwide

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