Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

Research output: Contribution to journalArticlepeer-review


  • Zhifang Zhou
  • Tao Zhang
  • Kang Wen
  • Huixiang Zeng
  • Xiaohong Chen

External organisations

  • Central South University
  • Hunan University of Commerce


The effect of carbon risk on the debt capital market has become increasingly prominent under carbon constraints. We use a panel regression model to examine the relationship between carbon risk and the cost of debt financing and the moderating effect of positive media attention on this relationship. Using a sample of 191 Chinese A‐share listed firms operating in high‐carbon industries covering the period 2011–15, we conduct an empirical study and find that the relationship between carbon risk and the cost of debt financing in China is a U‐shaped one. Thus, carbon risk exerts an “interval effect" on the cost of debt financing, which mainly exists in private firms rather than state‐owned firms. This relationship can be mitigated by positive media attention. Compared with private firms that receive low positive media attention, private firms with high positive media attention are more sensitive and less tolerant to environmental regulations. Our findings provide firms with practical advice on carbon risk management, particularly on improving carbon transparency and mitigating the cost of debt financing.


Original languageEnglish
Pages (from-to)1-14
Number of pages14
JournalBusiness Strategy and the Environment
Early online date30 Mar 2018
Publication statusE-pub ahead of print - 30 Mar 2018


  • carbon risk, cost of debt financing, high‐carbon industry, media attention, nonlinear regression analysis