Work

Corporate Social Irresponsibility and the Cost of Equity Capital: Evidence From Listed Firms in China

Year: 2025

Type: article

Abstract: This paper studies the association between corporate social irresponsibility (CSI) and the cost of equity capital in China. Using a sample of 180 firms listed on the main board of the Shenzhen Stock Exchange over the period 2013–2018, we identify and measure the extent of corporate misconduct among these firms by creating an index of CSI activity relating to their environmental, social and governance characteristics. We then test the impact of CSI on their cost of equity capital. Our results reveal that higher CSI activities of firms raise their cost of equity financing, although this positive relationship between CSI and the cost of equity capital is shaped by the firms’ systematic risks and the institutional environment in which the firms operate.

Source: The Singapore Economic Review

DOI: 10.1142/s0217590825500201

Authors: FEIFEI LIU, CHENGCHUN LI, SAILESH TANNA, DA TENG

Institutions: Suzhou University of Technology, Coventry University, Beijing University of Chemical Technology

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funder: Beijing Municipal Social Science Foundation

Award: G6076888785