ESG disclosure and investment-financing maturity mismatch: Evidence from China

Abstract

Although the maturity matching theory argues that easing information asymmetry risk contributes to reducing mismatches, the role of non-financial information disclosure in this process remains unclear. This paper investigates the relationship between environmental, social, and governance (ESG) disclosure and the phenomenon of companies using short-term loans for long-term investments. Using data from companies listed in the Chinese Stock Exchanges, we demonstrate that: (1) ESG disclosure effectively reduces the incidence of maturity mismatches, mainly due to improved environmental performance and governance capacity rather than increased social responsibility; (2) There is significant heterogeneity in the effect of ESG disclosure on investment-financing maturity mismatches, which is associated with differences in companies’ ownership structures, innovation capabilities, and financing accessibility; (3) Improvement in company financing capacity, including higher equity liquidity, more optimized debt structure, and lower debt cost, explains the source of ESG’s contributions; (4) Further analysis shows that while the reduction in maturity mismatch risk arising from ESG disclosure improves companies’ productivity and competitiveness, its influence on cross-regional investment and investment efficiency is limited.