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Can enterprises' participation in targeted poverty alleviation reduce the cost of debt financing? Evidence from China

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  • Zhao, Wenjia
  • Liang, Yiyan
  • Li, Pan

Abstract

Poverty reduction is a hot topic in current academic research. Using a sample of Shanghai and Shenzhen A-share listed enterprises in China, this paper investigates whether firms participate in targeted poverty relief project can reduce debt financing costs. The study finds that enterprises' participation in targeted poverty alleviation effectively reduces debt financing costs. Mechanism tests further demonstrate that such participation diminishes the information asymmetry between internal and external enterprises, enhances brand value and reputation, attracts ESG investors to invest, and ultimately results in reduced debt financing costs. Furthermore, private enterprises' participation in targeted poverty alleviation is more effective in reducing their debt financing costs compared with state-owned enterprises. These findings highlight the win-win nature of enterprises' involvement in targeted poverty alleviation, offering valuable insights for developing countries to sustainably eliminate poverty.

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  • Zhao, Wenjia & Liang, Yiyan & Li, Pan, 2023. "Can enterprises' participation in targeted poverty alleviation reduce the cost of debt financing? Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009236
    DOI: 10.1016/j.frl.2023.104551
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    Cited by:

    1. Shi, Xuanyi & Lin, Yongjia & Wang, Yizhi, 2024. "Targeting poverty alleviation and stock price crash risk," Finance Research Letters, Elsevier, vol. 69(PB).
    2. Wang, Muyun & Zhang, Ying, 2024. "Excess goodwill and enterprise litigation risk," Finance Research Letters, Elsevier, vol. 67(PB).
    3. Wei, Fang & Yan, Siyao & Su, Daan & Zhang, Minyuan, 2024. "Management tone and corporate social responsibility: Evidence from Chinese listed companies' involvement in rural revitalization," Finance Research Letters, Elsevier, vol. 65(C).
    4. Yu Zhang & Xiaotong Wang & Wei Guo & Xinlei Guo & Qisheng Wang & Xin Tan, 2024. "Does ESG Performance Affect the Enterprise Value of China’s Heavily Polluting Listed Companies?," Sustainability, MDPI, vol. 16(7), pages 1-21, March.
    5. Meng, Bin & Lin, Zhipeng & Liu, Tao & Shi, Baofeng, 2024. "Political connection and corporate senior-care investment: Active investment or passive involvement?," Finance Research Letters, Elsevier, vol. 67(PA).

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