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Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high-carbon industries
journal contribution
posted on 2019-06-17, 09:01 authored by Zhifang Zhou, Tao ZhangTao Zhang, Kang Wen, Huixiang Zeng, Xiaohong ChenThe effect of carbon risk on the debt capital market has become increasingly prominent under carbon constraints. We use a panel regression model to examine the relationship between carbon risk and the cost of debt financing and the moderating effect of positive media attention on this relationship. Using a sample of 191 Chinese A‐share listed firms operating in high‐carbon industries covering the period 2011–15, we conduct an empirical study and find that the relationship between carbon risk and the cost of debt financing in China is a U‐shaped one. Thus, carbon risk exerts an “interval effect" on the cost of debt financing, which mainly exists in private firms rather than state‐owned firms. This relationship can be mitigated by positive media attention. Compared with private firms that receive low positive media attention, private firms with high positive media attention are more sensitive and less tolerant to environmental regulations. Our findings provide firms with practical advice on carbon risk management, particularly on improving carbon transparency and mitigating the cost of debt financing.
Funding
National Natural Science Funds of China, Grant/Award Number: No.71303263 71303263; State Key Program of National Natural Science of China, Grant/Award Number: No. 71431006 71431006; Project of Social Science Achievement Evaluation Committee of Hunan Province; Research and Innovation Project for Postgraduates in Hunan Province of China, Grant/Award Number: CX2016B036; Base Project of Social Science Fund of Hunan Province, Grant/Award Number: 16JD67; Key Projects of Philosophy and Social Sciences of the Ministry of Education, Grant/Award Number: 16JZD013; Natural Science Funds of Hunan Province, Grant/Award Number: 2017JJ3399.
History
School
- Loughborough University London
Published in
Business Strategy and the EnvironmentVolume
27Issue
8Pages
1131 - 1144Citation
ZHOU, Z. ... et al, 2018. Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high-carbon industries. Business Strategy and the Environment, 27 (8), pp.1131-1144.Publisher
Wiley © John Wiley & Sons, Ltd and ERP EnvironmentVersion
- VoR (Version of Record)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Acceptance date
2018-02-07Publication date
2018-03-30Notes
This paper is closed access.ISSN
0964-4733eISSN
1099-0836Publisher version
Language
- en
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