ESG and the Cost of Capital: Insights from an AI-Assisted Systematic Literature Review

TL;DR

This paper demonstrates how AI tools can efficiently synthesize literature on ESG factors and their impact on the cost of capital, revealing key insights and methodological challenges in corporate finance research.

Contribution

It introduces an AI-assisted systematic review method to analyze ESG and CoC literature, highlighting its effectiveness and new insights in the field.

Findings

AI streamlines literature identification and analysis

Synthesized 36 key studies on ESG and CoC

Identified theories, moderators, and challenges in the literature

Abstract

This paper explores how AI-powered tools could be leveraged to streamline the process of identifying, screening, and analyzing relevant literature in academic research. More specifically, we examine the documented relationship between environmental, social, and governance (ESG) factors and the cost of capital (CoC). By applying an AI-assisted workflow, we identified 36 published studies, synthesized their key findings, and highlighted relevant theories, moderators, and methodological challenges. Our analyses demonstrate the value of AI tools in enhancing business research processes and also contribute to the growing literature on the importance of ESG in the field of corporate finance.