RT Article
T1 Corporate Environmental Responsibility and the Cost of Capital: International Evidence
JF Journal of business ethics
VO 149
IS 2
SP 335
OP 361
A1 El Ghoul, Sadok
A1 Guedhami, Omrane
A1 Kim, Hakkon
A1 Park, Kwangwoo
LA English
PB Springer Science + Business Media B. V
YR 2018
UL https://www.ixtheo.de/Record/1785664441
AB We examine how corporate environmental responsibility (CER) affects the cost of equity capital for manufacturing firms in 30 countries. Using several approaches to estimate firms’ ex ante equity financing costs, we find in regressions that control for firm-level characteristics as well as industry, year, and country effects that the cost of equity capital is lower when firms have higher CER. This finding is robust to addressing endogeneity through instrumental variables, to using alternative specifications and proxies for the cost of equity capital, and to accounting for noise in analyst forecasts. We conclude that investment in CER reduces firms’ equity financing costs worldwide.
K1 M14
K1 G32
K1 Firm risk
K1 Cost of equity capital
K1 Environmental risk management
K1 Environmental liability risk
K1 Corporate environmental responsibility
DO 10.1007/s10551-015-3005-6