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Targeted poverty alleviation and the cost of equity capital: Evidence from China

Author

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  • He, Chaohua
  • Li, Yun

Abstract

The paper examines the impact of corporate targeted poverty alleviation (TPA) on corporate cost of equity. We find that: (1) TPA can reduce the cost of equity and integrated TPA has a more significant effect than charitable TPA; (2) The role of TPA is more pronounced in polluting companies; (3) Possible channels include signal effect, agency cost, and social investment preference. Our findings indicate that poverty could be alleviated by engaging companies seeking lower cost of equity in TPA.

Suggested Citation

  • He, Chaohua & Li, Yun, 2024. "Targeted poverty alleviation and the cost of equity capital: Evidence from China," Economics Letters, Elsevier, vol. 237(C).
    • Handle: RePEc:eee:ecolet:v:237:y:2024:i:c:s0165176524001472
    DOI: 10.1016/j.econlet.2024.111664
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    More about this item

    Keywords

    Targeted poverty alleviation; Integrated poverty alleviation; Charitable poverty alleviation; Cost of equity;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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