The Effect of Environmental, Social, and Governance (ESG) Performance on Corporate Financial Performance in China: Based on the Perspective of Innovation and Financial Constraints

Xu, Yiming; Zhu, Naiping

doi:10.3390/su16083329

Cited by 3 publications

(4 citation statements)

References 70 publications

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“…In Xu and Zhu's (2024) study, the mean ESG grade is 4.268, ranging from 2 to 6. These comparisons indicate that our findings align with previous studies, underscoring overvaluation issues and inconsistent attention to ESG practices among Chinese firms [69]. In addition, the P/B ratios of most firms are below one, indicating that the valuations of Chinese-listed companies are generally high.…”

Section: Descriptive Statisticssupporting

confidence: 88%

“…Most of the firms are profitable, but some of them lose money. Xu and Zhu (2024) found that the average return on assets (ROA) is 0.043, with profitability and loss trends aligning with our findings [69]. The ESG ratings of listed firms range from a high of 7.750 to a low of 1.000, with an average value of 4.173.…”

Section: Descriptive Statisticssupporting

confidence: 82%

“…A total of 18,650 individual observations of listed Chinese manufacturing companies were collected. This study employs panel data for regression analyses and examines mediating and moderating variables, following established and validated methodologies from previous research [69,70]. Significant improvements were made to ensure data reliability and enhance the completeness and accuracy of the database.…”

Section: Sample Selection and Data Sourcesmentioning

confidence: 99%

“…In this paper, ROA is chosen as the indicator for the following reasons: ROA reflects a firm's capacity to generate net profit from its total assets and is commonly utilized across diverse industries and firm types. Moreover, it is unaffected by a firm's size, making it suitable for assessing both profitability and asset utilization efficiency [69][70][71].…”

Section: Variable Settingmentioning

confidence: 99%

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ESG and Financial Performance of China Firms: The Mediating Role of Export Share and Moderating Role of Carbon Intensity

Ding,

Lee

2024

Sustainability

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In recent years, ESG (environmental, social, and governance) has emerged as a critical investment concept. Its goal is to create value for both shareholders and society, encouraging companies to optimize social value. However, the exploration and research into “the proportion of firms exporting and the pathways through which the environmental, social, and governance activities of carbon-intensive firms influence firms’ financial performance” remains largely unexplored. This study establishes a research framework within this context, utilizing listed Chinese manufacturing companies as the research subjects. Taking agency theory rationale and signaling theory as the theoretical framework, this study thoroughly investigates the relationship between ESG ratings, corporate export ratios, and corporate financial performance through panel regression models using fixed-time, fixed-industry, and bi-directional fixed-effects models. The results of this study show that (1) ESG ratings have a positive impact on corporate financial performance; (2) firms’ export ratios play a mediating role in the relationship between ESG ratings and corporate financial performance; and (3) carbon-intensive firms have a positive moderating effect on the relationship between ESG ratings and corporate financial performance. Based on these findings, we propose policy recommendations at the firm and government levels to increase the importance of ESG, strengthen corporate governance, and promote continuous progress in ESG. This study provides micro evidence of the interactions between ESG ratings, export ratios, carbon-intensive firms, and firm performance to enable investors to make informed decisions.

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Section: Descriptive Statisticssupporting

confidence: 88%

Section: Descriptive Statisticssupporting

confidence: 82%

Section: Sample Selection and Data Sourcesmentioning

confidence: 99%

Section: Variable Settingmentioning

confidence: 99%

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ESG and Financial Performance of China Firms: The Mediating Role of Export Share and Moderating Role of Carbon Intensity

Ding,

Lee

2024

Sustainability

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Revealing the contribution of corporate sustainability practices to financial performance: Case of BIST Sustainability 25 Index companies

Serpeninova,

Lehenchuk,

Zdyrko

et al. 2024

Environmental Economics

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The purpose of the paper is to study the impact of corporate sustainability practices on the financial performance of companies included in the BIST Sustainability 25 Index. To assess the efficiency and quality of corporate sustainability, general (ESG Disclosure Index) and partial (Environmental Disclosure Index, Social Disclosure Index, and Corporate Governance Disclosure Index) indices were used, calculated based on content analysis of sustainability reports. Based on the two given types of indices and four types of financial performance indicators (return on assets, return on equity, assets turnover ratio, and Tobin’s Q), two types of regression models (GEN models and PART models) were built, and eight analytical models were examined. Company size and leverage were included as control variables in each model. The regression analysis results were contradictory, partially confirming the conclusions of some scientists and refuting the findings of others. A study of GEN models revealed that companies implementing more effective general corporate sustainability practices have a significant positive impact only on return on equity; as for other measures (return on assets, assets turnover ratio, and Tobin’s Q), an insignificant relationship between them and ESG Disclosure Index was found. Results of the PART models analysis revealed a significant positive effect of the Social Disclosure Index on return on equity and assets turnover ratio and a negative relationship between the Corporate Governance Disclosure Index and assets turnover ratio. Using control variables for the two types of models showed a significant negative effect of company size on Tobin’s Q. AcknowledgmentThis study was supported by the Ministry of Education and Culture of Ukraine within the project “Development of a mechanism for the sustainable development of economic systems in the conditions of military operations and post-war recovery of the economy” (Registration number of the project: 0124U000463).

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Impact of Environmental, Social, and Governance on Innovation in Chinese Listed Firms

Wu,

Li,

Dai

et al. 2024

Sustainability

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As awareness of sustainable development has increased, the corporate advantages of ESG (environmental, social, and governance) have attracted widespread attention from investors, and research has demonstrated that ESG has a sustained impact on long-term business operations. At this new stage of market development, the relationship between ESG rating performance and corporate innovation is worthy of in-depth study. The effect of corporate ESG rating performance on innovation based on stakeholder theory was tested using data from Chinese A-share listed companies from 2009 to 2021. The results show that ESG rating performance can significantly improve corporate innovative output and R&D (research and development) investment. This promotional effect is more significant in large enterprises, state-owned enterprises, and companies in the eastern region of China. ESG rating performance promotes corporate innovation by improving firm financial performance and expanding internationalization. In addition, ESG rating performance not only increases the quantity of innovative output, but also helps to improve the quality of R&D investment. ESG strategy, standardized and mandatory disclosure of information pertaining to ESG, improved quality of information disclosed, and promotion of corporate innovation are all necessary to help enterprises develop in this new era.

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The Effect of Environmental, Social, and Governance (ESG) Performance on Corporate Financial Performance in China: Based on the Perspective of Innovation and Financial Constraints

Cited by 3 publications

References 70 publications

ESG and Financial Performance of China Firms: The Mediating Role of Export Share and Moderating Role of Carbon Intensity

ESG and Financial Performance of China Firms: The Mediating Role of Export Share and Moderating Role of Carbon Intensity

Revealing the contribution of corporate sustainability practices to financial performance: Case of BIST Sustainability 25 Index companies

Impact of Environmental, Social, and Governance on Innovation in Chinese Listed Firms

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