Abstract
Water-related risks are the focus of existing social concerns. Although academic and practical circles are aware of the existence of water risk and its potential harm, its economic consequences have not been quantitatively discussed from the perspective of enterprises. We empirically test the impact of water risk on debt financing ability using A-share listed companies in China's highly water-sensitive industries as samples. Water risk is found to significantly reduce the scale and increase the cost of debt financing, particularly for nonstate-owned companies. Institutional investor research can reduce the impact of water risk on the scale and cost of debt financing. On the one hand, we expand the relevant research on the debt financing ability of enterprises. On the other hand, we also explore the influence of water risk on enterprise management. Our conclusions provide an important reference for water risk and environmental management in enterprises.
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