The Moderating Role of Policy Intervention on the Relationship of Environment, Social, and Governance (ESG) and Cost of Equity Capital: A Study in Basic Materials Companies in Asia

IF 1.6 Q3 BUSINESS, FINANCE
Yanthi Hutagaol-Martowidjojo, Valentina Tohang, Emmanuella P.T. Payung
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引用次数: 0

Abstract

Environment, Social, and Governance (ESG) disclosure is a non-financial disclosure that is expected to enhance firms’ transparency, ease estimation of risk, hence lower cost of equity (CoE). However prior studies show mixed results. Using Institutional theory, this paper argues that sustainability policy intervention could have a different effect. However, this framework expects that the more ESG disclosure, the higher firms’ cost of equity (CoE) due to shareholders’ perception of mindless ESG plan. The policy intervention examined is government regulation of mandatory sustainability practices. This study uses a sample of 98 basic materials sector companies in eleven Asia countries with 5 years study period from 2017-2021 as a research sample. Using panel-data regression analysis, this study finds that there is a positive relationship between ESG scores and CoE. Moreover, the government policy strengthens such a relationship. Therefore, consistent with coercive mechanism in institutional theory, we conclude that mandatory sustainability disclosure in the Asian Basic material sector companies in-creases firms’ CoE and the existence of mandatory regulation strengthens such a relationship.
政策干预对环境、社会和治理(ESG)与股权资本成本关系的调节作用——基于亚洲基础材料公司的研究
环境、社会和治理(ESG)披露是一种非财务披露,有望提高公司的透明度,简化风险估计,从而降低股权成本(CoE)。然而,之前的研究结果喜忧参半。本文运用制度理论,论证了可持续性政策干预可能产生不同的效果。然而,该框架预期ESG披露越多,由于股东对无意识ESG计划的感知,企业的股权成本(CoE)越高。研究的政策干预是政府对强制性可持续性实践的监管。本研究以亚洲11个国家的98家基础材料行业公司为样本,研究周期为2017-2021年,为期5年。通过面板数据回归分析,本研究发现ESG得分与CoE之间存在正相关关系。此外,政府的政策加强了这种关系。因此,与制度理论中的强制机制一致,我们得出结论:亚洲基础材料行业公司强制性可持续性信息披露增加了公司的CoE,强制性监管的存在强化了这种关系。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
3.90
自引率
15.80%
发文量
22
审稿时长
24 weeks
期刊介绍: The Australasian Accounting, Business and Finance Journal is a double blind peer reviewed academic journal. The main focus of our journal is to encourage research from areas of social and environmental critique, exploration and innovation as well as from more traditional areas of accounting, finance, financial planning and banking research. There are no fees or charges associated with submitting to or publishing in this journal.
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