The moderating role of the non-financial performance of the product market in the relationship between ESG activities with the cost of capital of common stock in Listed Companies in the Tehran Stock Exchange.

Subject Areas : Journal of Capital Market Analysis

zahra zolfaghari ¹ , Naser Izadinia ² , saeid aliahamdi ³

1 - Department of Accounting, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.
2 - Associate Professor of Accounting, University of Isfahan, Administrative sciences & Economics, Isfahan, Iran.
3 - Department of Accounting, Isfahan (Khorasgan) Branch,Islamic Azad University, Isfahan, Iran

Received: 2024-05-01 Accepted : 2024-07-16 Published : 2024-08-08

Keywords: non-financial product market performance, ESG activities, cost of capital of common stock .,

Abstract :

The cost of capital of common stock is one of the basic concepts in the field of financial literature, which plays an important role in financial decisions. Managers, to determine financial resources, must determine the cost of providing financial resources and determine the factors affecting it. Companies that have disclosed ESG responsibility in their financial reports have a lower cost of capital than other companies. Companies are investing in competitive markets at an increasing speed to compete with developed economies. Examining the evidence on competitive markets is very important to understand how environmental, social, and corporate governance activities can shape future economic growth. The purpose of this research is to investigate the moderating role of the non-financial performance of the product market in the relationship between environmental, social, and corporate governance activities with the cost of capital in companies listed on the Tehran Stock Exchange in the 6-years between 1396 and it is 1401. 147 companies were selected by systematic elimination method to test the hypotheses, and the regression method of multivariable combined data was used. The findings showed that there is a negative relationship between ESG activities with the cost of capital in companies listed on the Tehran Stock Exchange. Also, the non-financial performance of the product market has a moderating role in the relationship between ESG activities and the cost of common stock capital. The findings of the research can provide evidence for company managers to determine a competitive strategy based on non-financial and forward-looking information reporting.

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