Globalization, ESG Investing and Emerging Market Cost of Capital

Adrien Alvero; Renxuan Wang; Zheyang Zhu

doi:10.2139/ssrn.4097760

Globalization, ESG Investing and Emerging Market Cost of Capital

Adrien Alvero
, Renxuan Wang
, Zheyang Zhu

Finance

Research output: Working paper › Preprint

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Abstract

We assess the impact of investors’ ESG preferences on firms’ cost of capital in an international context. By matching onshore and offshore bonds from the same issuer and using the opening of the Chinese bond market as a quasi-experiment, we control for time-varying issuer characteristics that potentially correlate with ESG scores. Our findings reveal that issuers in the top ESG quartile experience an 8.8% reduction in borrowing costs compared to those in the bottom quartile, despite modest overseas capital flows. These results highlight the role of heterogeneous
investor preferences and demand elasticity when evaluating the impact of ESG investing.

Original language	English
DOIs	https://doi.org/10.2139/ssrn.4097760
Publication status	Published - 5 Apr 2025

Keywords

ESG-investing
globalization
investor preferences
emerging markets
inelastic demand
Chinese bond markets

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10.2139/ssrn.4097760Licence: CC BY-NC-ND

Globalization, ESG Investing and Emerging Market Cost of CapitalSubmitted manuscript, 986 KBLicence: CC BY-NC-ND

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Globalization, ESG Investing and Emerging Market Cost of Capital

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