Abstract
Using a novel sample covering 3783 US public firms from 2007 to 2020, we examine how negative media coverage of firm-level environmental, social, and governance (ESG) practices affects a firm's debt choice. We find that firms with higher ESG reputation risk rely more on public bond than bank loan. The social and governance components, in particular, matter. Moreover, firms that receive more negative news coverage display a higher propensity to issue new bonds as opposed to securing new bank debt. Overall, our study presents empirical evidence on the relation between firm ESG reputation risk and debt financing.
| Original language | English |
|---|---|
| Journal | European Financial Management |
| Early online date | 8 Nov 2023 |
| DOIs | |
| Publication status | E-pub ahead of print - 8 Nov 2023 |
Keywords
- capital structure
- debt choices
- debt structure
- ESG reputation risk
- information asymmetry