Corporate Green Investment and Debt Financing Costs: The Moderating Role of Green Institutional Investor Attention in China

This study examines the association between corporate green investment and subsequent debt financing cost and the moderating role of prior green institutional investor attention. Using 40,060 firm-year observations from 4633 non-financial Chinese A-share firms over investment years 2011–2024, firm and year fixed-effects models relate investment in year t to financing cost in year t + 1, with attention and pre-investment financing cost measured in year t − 1. Green investment is associated with lower subsequent financing cost, and this association becomes more negative as prior attention increases. At the 25th and 75th percentiles of attention, a one-percentage-point increase in green investment relative to total assets is associated with financing-cost reductions of 2.75 and 3.62 basis points, respectively. The negative interaction persists after ownership and selected liability-composition controls, within positive-investment observations, and under alternative clustered and wild-cluster bootstrap inference. Evidence is stronger for financing-cost measures scaled by total liabilities than for the measure based on average core interest-bearing debt. Period comparisons indicate a stronger negative investment association but weaker attention moderation after 2019, including when 2020 is excluded. Differences across firm characteristics and environmental-exposure groups are less conclusive after multiple-testing adjustment. The findings associate the financing relevance of environmental expenditure with prior specialized investor attention, with the strength of the evidence varying across accounting measures and periods.