ESG performance, investors’ heterogeneous beliefs, and cost of equity capital in China

Previous studies on the relationship between environmental, social and governance (ESG) information disclosure cost of equity (COE) have found mixed results. They conclude that this may be affected by some attributes company inside. In study, we examine whether investors’heterogeneous beliefs moderates ESG performance COE. Our sample starts with ESG-rating firms included in Huazheng index Wind China financial database (WIND) for years 2015–2020. We collect relevant data from Stock Market Accounting Research (CSMAR). Using a two-way fixed effect multiple regression model, report negative moderate both also find COE Is higher when firm financing constraints increase. Investors’heterogeneous lower (rather than higher) level tends to pay close attention stakeholders decreases, which then leads reduction investors’ expected risk. therefore manage actions issues better choices release investors disagreements turn reduces their costs.