Do environmental violations affect corporate loan financing? Evidence from China. Issue 7 (3rd October 2017)

• Record Type: Journal Article
• Authors: Zou, Hailiang; Zeng, Saixing; Qi, Guoyou; Shuai, Ping
• Is Part Of: Human & ecological risk assessment. Volume 23:Issue 7(2017)
• Page Start: 1775
• Page End: 1795
• Publication Date: 2017-10-03
• Subjects: corporate environmental violation -- loan financing -- secured lending -- state ownership -- media; Health risk assessment -- Periodicals; Ecological risk assessment -- Periodicals; Ecology -- Periodicals; Risk Assessment -- Periodicals; 363.102
• DOI: 10.1080/10807039.2017.1346462
• Languages: English
• ISSNs: 1080-7039

Abstract

ABSTRACT: This article reports an empirical study suggesting that environmental violations generally have a negative influence on the level of loans that the violating firms hold in China and that after a violation announcement involving waste water discharge, firms are forced to take secured loans. These effects are found to be mitigated for state-owned firms and the media coverage of a certain violation event has a negative effect on the level of loans that firms obtain. Our work presents the evidence of a penalty mechanism in the credit market that fines firms for their environmental violations in a transition economy, and has some implications for business management and governmental policy.