Carbon information disclosure and equity financing costs in China: evidence from the dual-carbon policy framework

Under the backdrop of the global trend of carbon reduction, the Chinese Government is intensifying the oversight of carbon information disclosure by listed companies. In this study, we investigate the effect of carbon information disclosure on the company's cost of equity, using a dataset of Chinese A-share listed companies for the period from 2018 to 2024. Employing text breakdown and the entropy method to develop a comprehensive carbon information disclosure index, this study examines the empirical relevance between disclosure quality and cost of equity. The findings indicate that better carbon information disclosure significantly reduces the cost of equity. Environmental, social, and governance rating is also identified as a partial mediator in the relationship between carbon transparency and cost of equity. Heterogeneity analysis reveals that the magnitude of this effect varies slightly across subsamples while the negative association remains robust across various ownership structures and carbon-market participation statuses. This study provides critical policy references for company officers and regulators, while enriching references about the efficiency of carbon trading and capital markets.