Work

Corporate Green Investment and Debt Financing Costs: The Moderating Role of Green Institutional Investor Attention in China

Year: 2026

Type: article

Abstract: This study examines the association between corporate green investment and subsequent debt financing cost and the moderating role of prior green institutional investor attention. Using 40,060 firm-year observations from 4633 non-financial Chinese A-share firms over investment years 2011–2024, firm and year fixed-effects models relate investment in year t to financing cost in year t + 1, with attention and pre-investment financing cost measured in year t − 1. Green investment is associated with lower subsequent financing cost, and this association becomes more negative as prior attention increases. At the 25th and 75th percentiles of attention, a one-percentage-point increase in green investment relative to total assets is associated with financing-cost reductions of 2.75 and 3.62 basis points, respectively. The negative interaction persists after ownership and selected liability-composition controls, within positive-investment observations, and under alternative clustered and wild-cluster bootstrap inference. Evidence is stronger for financing-cost measures scaled by total liabilities than for the measure based on average core interest-bearing debt. Period comparisons indicate a stronger negative investment association but weaker attention moderation after 2019, including when 2020 is excluded. Differences across firm characteristics and environmental-exposure groups are less conclusive after multiple-testing adjustment. The findings associate the financing relevance of environmental expenditure with prior specialized investor attention, with the strength of the evidence varying across accounting measures and periods.

Source: Sustainability

DOI: 10.3390/su182111213

Authors: Anqi Chen, Tze San Ong, Zhen Tan

Institutions: East China Jiaotong University, Universiti Putra Malaysia, Daffodil International University, Central South University of Forestry and Technology

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $2,896