Open AccessStudy on ESG and Trade Credit Financing
Author(s) -
Rongfu Xu
Publication year - 2022
Publication title -
bcp business and management
Language(s) - English
Resource type - Journals
ISSN - 2692-6156
DOI - 10.54691/bcpbm.v18i.551
Subject(s) - trade credit , business , credit rating , corporate governance , sample (material) , finance , trade finance , credit enhancement , financial system , state owned , credit reference , economics , credit risk , market economy , public finance , chemistry , chromatography , macroeconomics
This paper investigates the effect of Environment, Social, and Governance (ESG) rating on corporations’ trade credit financing. Using a sample of 1235 Chinese companies, we find that those with higher ESG ratings perform better in raising trade credit financing. In addition, the positive relationship between ESG rating and trade credit financing is more pronounced in big and non-state-owned firms. The study's central message is that ESG plays an essential role in predicting trade credit financing. Hence, it should not be ignored while considering firms’ expenditure, especially for big and non-state-owned firms.