IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v91y2026ics1544612325027084.html

The impact of short-term debt for long-term investment on corporate ESG performance

Author

Listed:
  • Tang, Long
  • Hu, Jin
  • Stauvermann, Peter J.
  • Xiong, Ziyi

Abstract

Improving corporate social responsibility performance by optimizing financial behavior is of great significance for promoting sustainable development. This paper utilizes panel data of Chinese listed companies from 2011 to 2023 to investigate the impact and underlying mechanisms of short-term debt for long-term investment (STD-LTI) on corporate ESG performance. The study finds that for each one standard deviation increase in the degree of short-term borrowing for long-term investment by a company, its ESG score will significantly decrease by approximately 0.0390.. The main function channels include increasing credit rents, inhibiting the development of supply chain finance, and reducing environmental investments. Moreover, the effects vary significantly depending on enterprise ownership, managerial myopia level, and the intensity of external supervision. This paper provides insights for fostering government-bank-enterprise cooperation, optimizing corporate financing strategies, and enhancing social responsibility practices.

Suggested Citation

  • Tang, Long & Hu, Jin & Stauvermann, Peter J. & Xiong, Ziyi, 2026. "The impact of short-term debt for long-term investment on corporate ESG performance," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612325027084
    DOI: 10.1016/j.frl.2025.109459
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325027084
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109459?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Cong & Teng, Wei & Liu, Zhaoqian, 2025. "Does managerial short-termism affect corporate social responsibility?," Finance Research Letters, Elsevier, vol. 73(C).
    2. Czarnitzki, Dirk & Kraft, Kornelius, 2009. "Capital control, debt financing and innovative activity," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 372-383, August.
    3. Matthias Kahl & Anil Shivdasani & Yihui Wang, 2015. "Short-Term Debt as Bridge Financing: Evidence from the Commercial Paper Market," Journal of Finance, American Finance Association, vol. 70(1), pages 211-255, February.
    4. Douglas W. Diamond, 1991. "Debt Maturity Structure and Liquidity Risk," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 709-737.
    5. Da Gao & Linfang Tan & Yue Chen, 2025. "Smarter is greener: can intelligent manufacturing improve enterprises’ ESG performance?," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.
    6. Chen, Yunling & Liu, Ming & Su, Jun, 2013. "Greasing the wheels of bank lending: Evidence from private firms in China," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2533-2545.
    7. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    8. Wang, Hang & Liu, Haiying, 2025. "Effects of equity incentives on corporate ESG performance–Multiperiod difference-in-differences method," Finance Research Letters, Elsevier, vol. 79(C).
    9. Qiang, Qunli & Li, Sijia & Meng, Lingmei & Lei, Yuan, 2025. "ESG performance and corporate value creation efficiency: Evidence from China," Finance Research Letters, Elsevier, vol. 81(C).
    10. Custódio, Cláudia & Ferreira, Miguel A. & Laureano, Luís, 2013. "Why are US firms using more short-term debt?," Journal of Financial Economics, Elsevier, vol. 108(1), pages 182-212.
    11. Julian Mattes & Sascha Steffen & Mark Wahrenburg, 2013. "Do Information Rents in Loan Spreads Persist over the Business Cycles?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 43(2), pages 175-195, April.
    12. Da Gao & Xiaotian Zhou & Jing Wan, 2024. "Unlocking sustainability potential: The impact of green finance reform on corporate ESG performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4211-4226, September.
    13. Francois Brochet & Maria Loumioti & George Serafeim, 2015. "Speaking of the short-term: disclosure horizon and managerial myopia," Review of Accounting Studies, Springer, vol. 20(3), pages 1122-1163, September.
    14. Tang, Long & Wen, Yanbing & Jiang, Yan, 2025. "Can digital finance foster green innovation in short-term debt for long-term investment firms?," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    15. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tang, Long & Wen, Yanbing & Jiang, Yan, 2025. "Can digital finance foster green innovation in short-term debt for long-term investment firms?," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    2. Wang, Man & Wang, Xueting, 2025. "Geopolitical risk and corporate maturity mismatch," Journal of Financial Stability, Elsevier, vol. 78(C).
    3. Chen, Zongnan & Zhou, Maoyuan & Wan, Chuang & Chen, Tingzhu, 2025. "The impact of digital finance development on corporate debt maturity structure," Finance Research Letters, Elsevier, vol. 84(C).
    4. Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi, 2021. "Human capital in the financial sector and corporate debt maturity," China Economic Review, Elsevier, vol. 69(C).
    5. Ma, Sichao & Peng, Yuchao & Wu, Wanting & Zhu, Feifei, 2022. "Bank liquidity hoarding and corporate maturity mismatch: Evidence from China," Research in International Business and Finance, Elsevier, vol. 63(C).
    6. Liang, Shuzhen & Ye, Yongwei & Zhang, Ruifeng, 2025. "Social credit system and the alleviation of investment–financing maturity mismatch in China," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1415-1435.
    7. Chen, Lirong & Gao, Feiyang & Guo, Tongtong & Huang, Xuanhao, 2023. "Mixed ownership reform and the short-term debt for long-term investment of non-state-owned enterprises: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 90(C).
    8. Liu, Cai & He, Xiaoxiao, 2025. "The unintended consequences of retail investor attention: the case of the long-term use of short-term debt," Finance Research Letters, Elsevier, vol. 82(C).
    9. Bu, Jun & Chang, Yanfeng & Fei, Tianlun & Li, Xueying, 2025. "It is a marathon, not a sprint: The impact of supply chain finance on firms’ short-term debt for long-term investments," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    10. Tan, Chunzhi & Liu, Junjie & Ma, Junfeng & Liu, Bin & Ren, Boru, 2025. "When climate policies waver: Firms, debt, and the investment-financing maturity mismatch," Finance Research Letters, Elsevier, vol. 85(PB).
    11. Jing Wu & Qiuge Yao & Haoxiang Tong, 2019. "Does monetary policy tightening reduce the maturity mismatch of investment and financing: Empirical evidence from China," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-3.
    12. Shang, Chenguang, 2021. "Dare to play with fire? Managerial ability and the use of short-term debt," Journal of Corporate Finance, Elsevier, vol. 70(C).
    13. Qianbin Feng & Lexin Zhao & Mingxue Xu, 2023. "Tax Incentives and Maturity Mismatch between Investment and Financing: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(4), pages 1-36, July.
    14. Yong Chen & Yun‐Ching Chang & Guan‐Ying Huang, 2025. "Risk‐averse or altruistic? Board chairs' early‐life experience and debt maturity," International Review of Finance, International Review of Finance Ltd., vol. 25(1), March.
    15. Cuneyt Orman & Bulent Koksal, 2015. "Structure of Debt Maturity across Firm Types," Working Papers 1521, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    16. Atawnah, Nader & Zaman, Rashid & Liu, Jia & Atawna, Thaer & Maghyereh, Aktham, 2023. "Does foreign competition affect corporate debt maturity structure? Evidence from import penetration," International Review of Financial Analysis, Elsevier, vol. 86(C).
    17. Hassan, M. Kabir & Karim, Md. Sydul & Kozlowski, Steven E., 2022. "Implications of public corruption for local firms: Evidence from corporate debt maturity," Journal of Financial Stability, Elsevier, vol. 58(C).
    18. Li, Bo & Cheng, Yue & Tian, Guangning, 2024. "Bank competition and firm asset- debt maturity mismatch: Evidence from the SMEs in China," Research in International Business and Finance, Elsevier, vol. 69(C).
    19. Dung T. T. Tran & Hieu V. Phan, 2022. "Government economic policy uncertainty and corporate debt contracting," International Review of Finance, International Review of Finance Ltd., vol. 22(1), pages 169-199, March.
    20. Hu, Lifang, 2025. "Maturity mismatch and disinvestment as transmission mechanisms: Linking economic policy uncertainty to firm performance," China Economic Review, Elsevier, vol. 94(PB).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612325027084. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.