Can corporate ESG performance ease financing constraints

Abstract

Currently, corporate ESG disclosure as important non-financial information can convey the potential sustainability of a company to investors and become one of the key considerations in the investment and financing decision process. Corporate ESG alleviates financing constraints by reducing the degree of information asymmetry and agency problems. This paper adopts data of A-share listed companies in Shanghai and Shenzhen from 2011-2021, and systematically examines the specific effects and impact mechanisms between corporate ESG and financing constraints based on the two-way fixed-effect model and the China Securities ESG rating analysis report. The study finds that corporate ESG performance significantly alleviates financing constraints, and the findings remain robust after a series of robustness tests. The findings of this paper enrich the research on the economic consequences of corporate ESG for real enterprises and the influencing factors of corporate financing constraints, which have important inspirational influence and reference values for promoting high-quality corporate development.