The Impact of ESG Efficiency on the Cost of Equity Capital: Evidence from China

Journal of Corporate Finance Research. 2026. Vol. 20. No. 1. P. 86–99.

Nazarova V., Churakova I.

This paper presents an empirical analysis based on the correlation between ESG performance and cost of equity capital of listed companies in mainland China and Hong Kong, China from 2018 to 2022. The final empirical results of the study show that there is a negative correlation between ESG performance and cost of equity capital in China. The study also finds that among the three dimensions of ESG, the social dimension has the most significant impact on Chinese listed companies. The geographical location and property rights of companies also have an impact on the relationship between the two variables. Compared to companies in Hong Kong, the improvement in environmental, social, and corporate governance performance of mainland Chinese companies has a more pronounced effect on reducing the cost of equity capital. Similarly, compared to state-owned enterprises, the improvement in environmental, social, and corporate governance performance of non-state-owned enterprises has a more significant impact on reducing the cost of equity capital. These findings highlight the importance of incorporating ESG factors into business practices for the long-term success and sustainable growth of China's capital markets.
 

Keywords: структура собственности, cost of equity, стоимость капитала, ownership structure, ESG, ESG, mainland China, материковый Китай