Sustainability practices and the cost of debt: Evidence from ASEAN countries

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Our study aims to examine the effect of sustainability practices, measured by sustainability performance and disclosure, on the cost of debt of ASEAN firms (in Indonesia, Malaysia, the Philippines, Singapore, and Thailand). There is a significant research gap where there is a scarcity of literature examining the impact of sustainability practices on the cost of debt, especially in Southeast Asia, and much of the existing literature still has conflicting results. We employed panel data analysis using generalized least square random effects regression, based on a sample of 1,443 observations of from 2004 to 2019. The analysis reveals mixed results that a ASEAN firm's sustainability practices lowers its cost of debt. Albeit debtholders incorporate sustainability practices information (measured by disclosure) of ASEAN firms in their credit evaluation, debtholders do not find sustainability practices (measured by performance) to be significant. This is possibly due to some crucial information that are apparent in sustainability disclosure but not in sustainability performance scores. Moreover, the interaction between sustainability performance and sustainability disclosure shows complimentary relationship between the two. Lastly, by incorporating country sustainability characteristics, industry sensitivity, and corporate governance as moderating variables, we find the possibility of a prevailing substitute relationship between firm-level and country-level sustainability practices and immense expectations imposed by stakeholders to firms with environmentally harmful practices.

Original languageEnglish
Article number126942
JournalJournal of Cleaner Production
Publication statusPublished - 1 Jun 2021


  • Country sustainability characteristics
  • Sensitive industries
  • Sustainability disclosure
  • Sustainability performance
  • Sustainability practices
  • The cost of debt


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