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ESG rating disclosure and corporate bond credit spreads: a time-varying difference-in-differences analysis from China

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  • Du, Gang
  • Ouyang, Xiaoling
  • Tan, Ruipeng
  • Zhang, Lei

Abstract

As a result of China’s “dual carbon” strategy, environmental, social, and governance (ESG) practices have become increasingly crucial for guiding sustainable investment decisions. This study explores the impact of ESG rating disclosure on corporate bond credit spreads among A-share listed companies on China’s Shanghai and Shenzhen stock exchanges from 2010 to 2020. Based on ESG ratings provided by SynTao Green Finance and time-varying difference-in-differences approach, we found substantial evidence that enhanced ESG rating disclosure significantly reduces bond credit spreads. Further analysis revealed notable heterogeneity in this relationship, with stronger effects observed among firms in non-heavy polluting industries, regions characterized by higher levels of marketization, and companies where the roles of the chairperson of the board and CEO are unified. Additionally, superior ESG performance, particularly driven by social factors, is associated with greater reductions in bond credit spreads. Our findings demonstrate that ESG commitments can effectively reduce firms’ bond financing costs and ease financing constraints, thus providing valuable insights for policymakers and investors committed to high-quality and sustainable economic growth.

Suggested Citation

  • Du, Gang & Ouyang, Xiaoling & Tan, Ruipeng & Zhang, Lei, 2026. "ESG rating disclosure and corporate bond credit spreads: a time-varying difference-in-differences analysis from China," Journal of Business Research, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:jbrese:v:208:y:2026:i:c:s0148296326000767
    DOI: 10.1016/j.jbusres.2026.116042
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