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Corporate integrity culture and debt costs

Author

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  • Guo, Xiaofang
  • Jin, Xingye
  • Wang, Jingyu
  • Zuo, Congjiang

Abstract

This study examines the effect of corporate integrity culture on debt costs and its underlying mechanisms. The study constructs an index of corporate integrity culture based on the annual reports of Chinese A-share listed corporations by integrating large language models with machine learning. It analyzes the effect of integrity culture on debt costs. Findings show that corporations valuing integrity culture have significantly lower debt costs; this result holds after robustness checks. Mechanism analysis indicates that integrity culture strengthens corporate transparency and governance while reducing corporate violations and lowering debt costs. Heterogeneity analysis shows that the impact is more significant in private corporations, corporations with high external attention, and corporations in areas with higher marketization.

Suggested Citation

  • Guo, Xiaofang & Jin, Xingye & Wang, Jingyu & Zuo, Congjiang, 2025. "Corporate integrity culture and debt costs," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005988
    DOI: 10.1016/j.irfa.2025.104511
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    Keywords

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    JEL classification:

    • 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
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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