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Non-financial performance and real estate firms' cost of debt capital

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Listed:
  • Vlad-Andrei Porumb
  • Ion Anghel
  • Costin Ciora

Abstract

In this paper we analyze if the non-financial performance of real estate firms is associated with a decreased cost of capital. Specifically, we assess if firms with higher environmental, social, and corporate governance (ESG) performance benefit from reductions in the cost of debt capital. As ESG performance is associated with higher transparency, it is likely to be rewarded by private debt holders through better lending conditions. We draw on an international sample of real estate companies to test our contentions. Our findings suggest that firms with high ESG performance have a lower cost of debt relative to firms with low ESG performance. The results of this study bring important contributions to the academic literature and have significant practical implications.

Suggested Citation

  • Vlad-Andrei Porumb & Ion Anghel & Costin Ciora, 2017. "Non-financial performance and real estate firms' cost of debt capital," ERES eres2017_357, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2017_357
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    More about this item

    Keywords

    Banks; debt; non-financial; Performance; real-estate;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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