Corporations’ ESG for Sustainable Investment in China: The Moderating Role of Regional Marketization

Abstract

This paper aims to investigate corporations’ ESG for sustainable investment in China, with the moderating role of regional marketization. ESG is a form of business value for enterprises, including the three pillars of environmental, social, and governance, aimed at promoting the sustainable development of the economy and society. ESG is vital for corporations’ sustainable investment, but such influence is always limited by the level of regional marketization, which has been rarely studied by the previous literature. In this study, we use data from Chinese A-share listed companies from 2009 to 2021 to conduct an empirical analysis to examine whether ESG performance can improve firm investment and if the degree of regional marketization plays a moderating role. Furthermore, we identify the underlying mechanism of ESG performance influencing corporate investment. It has been discovered that ESG performance improves firm investment, and the impact of ESG performance on investment level enhancement is stronger in places with a higher level of marketization. The further tests still support our results. This study provides a reference to develop ESG and regional marketization to push corporations’ sustainable development.