RESEARCH ARTICLE
The Role of Environment Social and Governance (ESG) Score To Cost of Debt: Evidence From ASEAN Countries*
Moch. Doddy Ariefianto,
Fitriani Rahmansyah,
Valencia Wijaya,
Viary Audreane,
Moch. Doddy Ariefianto
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this authorCorresponding Author
Fitriani Rahmansyah
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Correspondence:
Fitriani Rahmansyah ([email protected])
Search for more papers by this authorValencia Wijaya
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this authorViary Audreane
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this authorMoch. Doddy Ariefianto,
Fitriani Rahmansyah,
Valencia Wijaya,
Viary Audreane,
Moch. Doddy Ariefianto
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this authorCorresponding Author
Fitriani Rahmansyah
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Correspondence:
Fitriani Rahmansyah ([email protected])
Search for more papers by this authorValencia Wijaya
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this authorViary Audreane
Finance Program Accounting Department, School of Accounting, Bina Nusantara University, Jakarta, Indonesia
Search for more papers by this author*We would like to thank two anonymous referees that have provided us with many valuable insights in improving our manuscript.
ABSTRACT
Environmental social governance (ESG) disclosure has become an increasingly important component in determining a company's financing cost (cost of debt-CoD). This phenomenon could be attributed to company reputation development and the rise of socially responsible investing. We contribute to the existing literature by investigating further the causality process of ESG scores to the reduction of CoD particularly in nonfinancial companies in one of the most dynamic world regions: Association of Southeast Asian Nations (ASEAN). To meet our research objective; we applied difference-in-difference analysis to a dataset of 135 nonfinancial companies (that published ESG score in Bloomberg) from 6 ASEAN countries, using annual frequency data from 2012 to 2021 (1350 observations). We found that ESG does reduce CoD in the range of 21.3% (measured by interest expense) to 27.7% (measured by credit spread). Our finding is quite solid under an array of robustness checks.
Open Research
Data Availability Statement
The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.
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