The Intermediary Role of ESG Ratings in the Relation between the Issuance of Sustainability Reports and the Cost of Equity Capital
The Intermediary Role of ESG Ratings in the Relation between the Issuance of Sustainability Reports and the Cost of Equity Capital
선우희연(세종대학교); 이우종(서울대학교); 정아름(사회적가치연구원); 김세희(서울대학교 경영연구소)
29권 2호, 1~30쪽
초록
The claimed association between the issuance of sustainability reports and the cost of equity capital does not hold for Korean listed companies. We propose two potential explanations for the muted association. First, the sustainability reports may not convey value-relevant information. Second, investors may not fully process unstructured sustainability information. We do not find a significant cross-sectional variation across corporate governance quality, rejecting the former. However, we find evidence that the issuance of sustainability reports decreases the cost of equity when supplemented with ESG ratings, supporting the latter. We conclude that ESG ratings facilitate investors processing of sustainability information.
Abstract
The claimed association between the issuance of sustainability reports and the cost of equity capital does not hold for Korean listed companies. We propose two potential explanations for the muted association. First, the sustainability reports may not convey value-relevant information. Second, investors may not fully process unstructured sustainability information. We do not find a significant cross-sectional variation across corporate governance quality, rejecting the former. However, we find evidence that the issuance of sustainability reports decreases the cost of equity when supplemented with ESG ratings, supporting the latter. We conclude that ESG ratings facilitate investors processing of sustainability information.
- 발행기관:
- 경영연구소
- 분류:
- 기타경영학