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Title
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The impact of a firm’s ESG score on its cost of capital : can a high ESG score serve as a substitute for a weaker legal environment
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Author
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Abstract
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| This article aims to analyse the relationship between the environmental, social and governance (ESG) score and the cost of capital of 600 large, mid and small capitalization companies across 17 countries that are component of the EURO STOXX 600 Index. By examining whether ESG has an impact on the cost of capital, this article contributes to the solutions to improve the impact of organizations and societies on sustainable development. The article further examines whether the effect is because of the environmental, social and/or governance components. In addition, the article analyses which WACC component (i.e. the cost of equity, the cost of debt, the beta or the leverage ratio) is affected. Furthermore, this article analyses whether a high ESG score can substitute for a weaker legal environment. |
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Language
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English
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Source (journal)
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Sustainability Accounting, Management and Policy Journal. - Bingley, 2010, currens
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Publication
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Bingley
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Emerald Group
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2024
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ISSN
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2040-803X
2040-8021
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DOI
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10.1108/SAMPJ-05-2023-0254
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Volume/pages
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2024
, p. 1-28
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Full text (Publisher's DOI)
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Full text (publisher's version - intranet only)
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