The Relationship of Carbon Emission Disclosure on The Cost of Debt

Carbon Emission Disclosure (CED) trends have been positive for several years. Unfortunately, studies focusing on the relationship between CED and the Cost of Debt (COD) still need to be made available, particularly in emerging countries. Addressing this gap, this study aims to analyze the relationship between CED and COD in Indonesia. We predict that firms can enjoy a lower COD by lowering asymmetry information and fulfilling public expectations through CED. Using the unique characteristic of Indonesian-listed firms that participated Public Disclosure Program for Environmental Compliance (PROPER) during 2015 to 2019, we confirmed our verdict. Our result is robust due to several endogeneity test checks. Our study is believed to be one of the pioneers in analyzing the impact of CED on COD in the emerging market. Moreover, this study sample is limited to firms that follow PROPER, and we believe this is one of the robust initiatives to minimize greenwashing practices in CED.