Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/340625 
Year of Publication: 
2025
Citation: 
[Journal:] Borsa İstanbul Review [ISSN:] 2214-8469 [Volume:] 25 [Issue:] 5 [Year:] 2025 [Pages:] 1085-1099
Publisher: 
Elsevier, Amsterdam
Abstract: 
This study investigates the impact of environmental, social, and governance (ESG) performance on the cost of capital, using a sample of 406 non-financial companies in the United Kingdom from 2014 to 2023. We examined how ESG performance and audit quality influence the cost of equity (CoE), cost of debt (CoD), and weighted average cost of capital (WACC). The findings reveal a significant negative relationship between ESG performance and all three measures, indicating that strong ESG practices can reduce financing costs. Additionally, higher audit fees are positively associated with WACC and CoE, with a particularly pronounced effect on CoD. Engagement with Big 4 auditors moderates these relationships. Overall, the results demonstrate that ESG performance not only enhances corporate reputation and sustainability but also delivers financial advantages by lowering the cost of capital. These insights have significant implications for corporate financing decisions and provide guidance for managers, investors, policymakers, regulators, and government entities.
Subjects: 
Audit fees
Big 4
Cost of capital
ESG performance
United Kingdom
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
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