Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025)

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Study on the Impact of ESG Rating Divergence on the Cost of Capital

Authors
Sijia Ma1, *
1School of Economics and Finance, Xi’an International Studies University, Xi’an, China
*Corresponding author. Email: 107242021001992@stu.xisu.edu.cn
Corresponding Author
Sijia Ma
Available Online 3 November 2025.
DOI
10.2991/978-94-6463-874-5_45How to use a DOI?
Keywords
ESG; ESG Rating Divergence; Cost of Capital
Abstract

This article empirically studies the relationship between ESG rating disagreements as well as corporate capital costs using Shanghai-Shenzhen A-shares listed firms, which from 2019-2023, with ESG ratings from China Securities Index, Wind, ESG Rating, SynTao Green Finance, FTSE Russell, and Bloomberg. Results show that ESG rating disagreements significantly increase firms’ capital costs through amplified information asymmetry and reduced investor confidence. Heterogeneity analysis reveals this effect is particularly pronounced among non-state-owned enterprises due to weaker institutional credit support, and eastern coastal enterprises facing higher expectation for ESG rating performance in developed markets contrasting to central as well as western regions. Mechanism tests indicate two distinct pathways: ESG ratings divergence will intensify media attention, thereby increasing capital costs, while simultaneously compelling firms to strengthen internal controls, which reduces capital costs through improved risk governance credibility. Based on these conclusions, the study proposes targeted recommendations for enterprises, regulatory authorities, and financial institutions to address the implications of ESG rating divergences.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025)
Series
Advances in Economics, Business and Management Research
Publication Date
3 November 2025
ISBN
978-94-6463-874-5
ISSN
2352-5428
DOI
10.2991/978-94-6463-874-5_45How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Sijia Ma
PY  - 2025
DA  - 2025/11/03
TI  - Study on the Impact of ESG Rating Divergence on the Cost of Capital
BT  - Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025)
PB  - Atlantis Press
SP  - 368
EP  - 382
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-874-5_45
DO  - 10.2991/978-94-6463-874-5_45
ID  - Ma2025
ER  -