ESG ratings serve as a crucial metric for assessing corporate sustainability. However, significant discrepancies exist among different ESG rating agencies when evaluating the same company's ESG performance. This study draws on data from Chinese A-share listed firms spanning from 2018 to 2024 to investigate how ESG rating disagreements affect corporate debt financing costs. The findings reveal that ESG rating disagreements significantly reduce debt financing costs. Green innovation efficiency weakens this cost-reducing effect. The inhibitory effect of ESG rating disagreements on debt financing costs is more pronounced in non-state-owned enterprises and companies located in eastern China. This research provides empirical evidence for understanding the microeconomic consequences of ESG rating disagreements. Based on the research findings, this study provides recommendations for different stakeholders. For ESG rating agencies, there is no need to standardize their criteria immediately. For investors, they can obtain more comprehensive information about corporate sustainability performance by collecting ratings from multiple ESG agencies. For corporations, they should seek an optimal balance between demonstrating tangible green innovation outcomes and maintaining rating adaptability.
Wenxin Tian (Tue,) studied this question.
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