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Article: Transmission Effects of ESG Disclosure Regulations through Bank Lending Networks
Title | Transmission Effects of ESG Disclosure Regulations through Bank Lending Networks |
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Authors | |
Issue Date | 1-Mar-2023 |
Publisher | Wiley |
Citation | Journal of Accounting Research, 2023, v. 61, n. 3, p. 935-978 How to Cite? |
Abstract | This paper studies whether and how ESG disclosure regulations imposed on banks generate transmission effects along the lending channel. I use a setting of U.S. firms borrowing from non-U.S. banks and exploit the staggered adoption of ESG disclosure regulations in banks’ home countries. I find that exposed borrowers of affected banks improve their environmental and social (E&S) performance following the disclosure mandate. Consistent with banks enhancing both their engagement and selection activities, affected banks impose more environmental action covenants in loan contracts, and they are more likely to terminate a borrower with bad E&S records following the regulation. Further evidence shows that the transmission effects are stronger when a disclosure regulation is well enforced (as indicated by a greater increase in banks’ disclosure) and among borrowers with greater switching costs. Collectively, the findings document the role of lending relationships in transmitting the real effect of ESG disclosure regulations from banks to borrowing firms. |
Persistent Identifier | http://hdl.handle.net/10722/328306 |
ISSN | 2023 Impact Factor: 4.9 2023 SCImago Journal Rankings: 6.625 |
DC Field | Value | Language |
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dc.contributor.author | Wang, Linghuan Lynn | - |
dc.date.accessioned | 2023-06-28T04:41:47Z | - |
dc.date.available | 2023-06-28T04:41:47Z | - |
dc.date.issued | 2023-03-01 | - |
dc.identifier.citation | Journal of Accounting Research, 2023, v. 61, n. 3, p. 935-978 | - |
dc.identifier.issn | 0021-8456 | - |
dc.identifier.uri | http://hdl.handle.net/10722/328306 | - |
dc.description.abstract | This paper studies whether and how ESG disclosure regulations imposed on banks generate transmission effects along the lending channel. I use a setting of U.S. firms borrowing from non-U.S. banks and exploit the staggered adoption of ESG disclosure regulations in banks’ home countries. I find that exposed borrowers of affected banks improve their environmental and social (E&S) performance following the disclosure mandate. Consistent with banks enhancing both their engagement and selection activities, affected banks impose more environmental action covenants in loan contracts, and they are more likely to terminate a borrower with bad E&S records following the regulation. Further evidence shows that the transmission effects are stronger when a disclosure regulation is well enforced (as indicated by a greater increase in banks’ disclosure) and among borrowers with greater switching costs. Collectively, the findings document the role of lending relationships in transmitting the real effect of ESG disclosure regulations from banks to borrowing firms. | - |
dc.language | eng | - |
dc.publisher | Wiley | - |
dc.relation.ispartof | Journal of Accounting Research | - |
dc.title | Transmission Effects of ESG Disclosure Regulations through Bank Lending Networks | - |
dc.type | Article | - |
dc.identifier.doi | 10.1111/1475-679X.12478 | - |
dc.identifier.hkuros | 344746 | - |
dc.identifier.volume | 61 | - |
dc.identifier.issue | 3 | - |
dc.identifier.spage | 935 | - |
dc.identifier.epage | 978 | - |
dc.identifier.eissn | 1475-679X | - |
dc.identifier.issnl | 0021-8456 | - |