From ethics to efficiency: Understanding the interconnected dynamics of ESG performance, financial efficiency, and cash holdings in China

Wang, Ziyuan; Zhang, Cong; Wu, Ran; Sha, Lina

doi:10.1016/j.frl.2024.105419

Cited by 6 publications

(2 citation statements)

References 26 publications

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“…Column (5) shows the coefficient of ESG performance on bank efficiency is significantly negative at the 10% confidence level, indicating that ESG performance reduces bank efficiency. In addition, column (6) shows that the estimated coefficient of ESG performance on the efficiency of insurance organizations is negative but not significant.…”

Section: Industry Attributesmentioning

confidence: 99%

“…In addition, Duque-Grisales [3] found that ESG performance reduced firm efficiency, by analyzing data from listed firms in Latin America, and Narula et al [4] used Indian firms as a sample for their study and found that ESG performance had little effect on firm efficiency. However, most of the evidence from China suggests that ESG performance can be effective in improving firm efficiency [5][6][7]. However, most of these studies focus on the effect of ESG performance on overall industry efficiency, while there are few relevant studies in the financial sector.…”

Section: Introductionmentioning

confidence: 99%

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Does Environmental, Social, and Governance (ESG) Performance Improve Financial Institutions’ Efficiency? Evidence from China

Wu,

Chen

2024

Mathematics

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Nowadays, the call for sustainable development is becoming stronger in all countries of the world, and environmental, social, and governance (ESG) performance, as a vivid practice of this concept, has gradually received extensive attention from enterprises and investors. Financial institutions have an important position in the national economy as an important tool for the state to regulate the macroeconomy. Whether ESG performance can improve financial institutions’ efficiency is of key significance for boosting sustainable development. Based on data from China’s listed financial institutions from 2015 to 2021, this study aims to investigate the impact of ESG performance on financial institutions. The robust nonparametric boundary model and fixed-effects model are employed for analysis. The empirical results demonstrate that ESG performance and its sub-indicators of environmental performance and social responsibility performance can significantly enhance financial institutions’ efficiency. In particular, this effect is more pronounced in the securities industry and diversified financial industry, as well as in non-state and small-scale financial institutions. The results remain unchanged after a series of robustness tests. Furthermore, the mechanism tests indicate that ESG performance can enhance financial institutions’ efficiency by reducing downside risk and agency costs.

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Section: Industry Attributesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does Environmental, Social, and Governance (ESG) Performance Improve Financial Institutions’ Efficiency? Evidence from China

Wu,

Chen

2024

Mathematics

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How does board gender diversity drive the ESG performance‐cash holdings relationship? Evidence from China

Marie,

Qi,

Elamer

et al. 2024

Int. J Fin Econ

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This study investigates the influence of board gender diversity on the relationship between environmental, social, and governance (ESG) performance and corporate cash holdings in Chinese A‐share listed companies from 2015 to 2022. Our research shows that ESG performance is positively associated with cash holdings. Drawing on critical mass theory, the study finds a moderating effect of board gender diversity in the relationship between ESG performance and the cash‐holding relationship. Specifically, the study finds a negative relation between ESG performance and cash holdings with the presence of a single female board member. However, this relationship shifts to a highly positive association when three or more female directors are on the board, underscoring the significant impact of gender diversity. Further heterogeneity analysis reveals that firms with a younger age profile and a strong commitment to green innovation exhibit a negative relationship between ESG performance and cash holdings. These findings highlight the complex and dynamic nature of the ESG performance‐cash holdings relationship, which varies according to specific firm characteristics. Overall, this study offers valuable insights into the multifaceted dynamics of ESG factors, enhancing our understanding of their impact on corporate financial strategies.

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Litigation risk and corporate cash holdings: The moderating effect of CEO tenure

Liu

2024

Finance Research Letters

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From ethics to efficiency: Understanding the interconnected dynamics of ESG performance, financial efficiency, and cash holdings in China

Cited by 6 publications

References 26 publications

Does Environmental, Social, and Governance (ESG) Performance Improve Financial Institutions’ Efficiency? Evidence from China

Does Environmental, Social, and Governance (ESG) Performance Improve Financial Institutions’ Efficiency? Evidence from China

How does board gender diversity drive the ESG performance‐cash holdings relationship? Evidence from China

Litigation risk and corporate cash holdings: The moderating effect of CEO tenure

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