Corporate sustainability and trade credit financing: Evidence from environmental, social, and governance ratings

Using Chinese listed companies from 2009 to 2020, this study investigates the impact of corporate sustainability (measure by environmental, social and governance [ESG] ratings) of listed companies on trade credit financing. Empirical results show that better ESG performance is related to lower information risk and operation risk, which can further increase corporate trade credit financing. The results remain significant after a series of robustness tests. Moreover, such relationship is more pronounced for non-state-owned enterprises. The findings of this paper enrich the existing studies on the economic consequences of ESG performance, and influencing factors of corporate trade credit financing. Meanwhile, the findings may provide some implications for corporate managers, investors, and suppliers in making management or investment decisions.