Time: 13:00-15:00 (UK Time), Wednesday, 18 January 2023
Presenter:  Dr. Sajid Chaudhry, Aston Business School
Chair: Prof. Victor Murinde, SOAS University of London

Abstract
This paper explores the impact of ESG (environment, social and corporate governance) factors on the cost of capital of firms. Our regression estimation documents that lenders provide preferential treatment and charge significantly lower interest rate to firms that have high environmental, social and corporate governance scores. We also find that the firms get further premium in the form of reduced interest rates if they have prior relationship with the lender as prior relationship reduces the information asymmetry between the lenders and borrowers. Our results holds even when we control for firm risk and other firm level characteristics, which show that the reduced interest rates are not a proxy for good quality borrowers but for their E, S and G scores. Our study supports the theory that sustainability pays off and firms are charged lower interest rates if they take care of the environment, are socially responsible and abide by corporate governance rules.  

Presenter 

Sajid Chaudhry is a senior lecturer in finance at Aston Business School since 2018. Before joining Aston Business School, he was a lecturer in finance at Birmingham Business School and at School of Management, Swansea University. He holds a PhD in Banking and Finance from Maastricht University, The Netherlands. He is also an Associate Editor of the International Journal of Finance and Economics. His current research interests focus on banking and financial stability, bank taxation, green banking and finance and FinTech. He has published in a range of economics and finance journals including Journal of Economic Behaviour and Organisation, Energy Economics, Journal of International Money and Finance among others.