Stakeholders’ increased concern for environmental sustainability has resulted in many firms placing greater emphasis on environmental performance management. Creditors are often major corporate stakeholders and as such when evaluating firms’ applications for debt financing examine how the environmental sustainability of an organisation mayudimpact on default risk and thus the cost of debt. Thisudstudy identifies the elements of the information flowsudbetween corporate borrowers and lenders and how environmental performance impacts on the cost of debtudfinancing. It develops a conceptual framework based onudstakeholder, agency theory and data flow diagram which traces the flow of environmental and financial information between lenders and corporate borrowers. The proposed framework is designed to identify information that determines the impact of corporate environmental performance on a firm’s cost of debt.
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