Innovation Effect of "Green Signaling": Exploration on Whether Enterprises' ESG Disclosure Facilitates Innovation Based on Empirical Analysis of A-share listed companies on SSE and SZSE

Abstract

This paper intended to study the impact of enterprises' ESG information disclosure on their innovation and further examines the heterogeneous role of power centralization as well as ownership through heterogeneity analysis. All the data adopted for analysis were from the A-shares listed companies traded on the two Chinese stock exchanges, the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) from 2008 to 2018. Through empirical analysis, the paper found that with other condition unchanged, enterprises' ESG disclosure significantly contributes to corporate innovation. In other words, an increase in ESG disclosure will promote more proactive innovation behavior. In terms of the heterogeneity analysis, the paper concluded that other things being equal, companies with highly centralized power or less confidence can see that ESG disclosure more significantly promotes innovative behavior. Besides, for non-state-owned enterprises, ESG disclosure will also significantly promote innovative behavior. In the end, the paper corroborated the consistency of the three findings through lagged variable regressions and instrumental variable (IV) regressions, and affirmed the robustness of the conclusions in the previous section. Finally, based on these findings, the paper proposed corresponding policy recommendations and insights.