The Association Among ESG External Assurance、Negative Media Coverage of Social Responsibility and Cost of Debt Capital
Mei-Hui Chen/Department of Financial Management, National Defense University
Yan-Hui Wu/Department of Financial Management, National Defense University
Abstract
Stakeholders are increasingly interested in ESG (Environment, Social, and Governance) issues, while ESG reporting can help stakeholders assess risks and business performance in a company. We take Taiwan-listed companies from 2014 to 2021 as samples to explore whether sustainability reporting and external assurance can influence the cost of debt. Further, how the media coverage of negative social responsibility news moderates the relationship between sustainability reporting and the cost of debt is investigated. Our empirical results indicate that the cost of debt for firms that issue sustainability reports with external assurance is lower than others, which may be associated with the reduction of information asymmetry between a firm and its stakeholders. However, the media coverage of negative social responsibility news will increase the cost of debt, suggesting that negative social responsibility news matters to creditors. Overall, our findings stress the importance of companies issuing sustainability reports and external assurance.