Corporate environmental performance and bond financing cost: A multi-stakeholder signaling perspective

While previous studies have explored the relationship between corporate environmental performance and bond financing costs, there remains a gap in understanding how different stakeholders influence the interpretation and effectiveness of environmental signals. This study adopts a multi-stakeholder signaling perspective to analyze the impact of corporate environmental performance on bond financing costs, considering the role of both internal and external stakeholders in shaping signal effectiveness. Using data from Chinese listed companies between 2012 and 2022, our findings show that corporate environmental performance serves as an effective signal to reduce bond financing cost. Four types of stakeholders in the signaling environment are identified as “signal moderators”. Specifically, CEO duality and supply chain concentration strengthen the effect of environmental performance on bond financing cost, while institutional investor preference and government-enterprise relationship weaken this effect. Moreover, mechanism analyses reveal that environmental performance reduces bond financing cost by improving operational efficiency and lowering financial risk. Heterogeneity analysis further indicates that this signaling effect is more pronounced in corporates operating in heavy-polluting industries, highly competitive markets, non-high-tech sectors, and those with low levels of carbon emission disclosure. By incorporating a multi-stakeholder signaling perspective, this study advances our understanding of green signal transmission and the signaling environment in bond markets.