Intergenerational succession occurrence and ESG performance: Evidence from the Chinese Market

To address escalating environmental challenges and the energy crisis, traditional energy companies must initiate green transformations and enhance green innovation. ESG (Environmental, Social, and Governance) performance is vital for gauging enterprises’ sustainable development. Therefore, this study explores the relationship between the ESG performance of traditional energy companies and their extent of green innovation. It aims to investigate whether improving ESG performance can lead to enhanced green innovation within these companies. Therefore, this paper employs a fixed effect model to analyze the impact of ESG performance on green innovation among traditional energy companies, specifically focusing on those listed in the Chinese A-share market from 2013 to 2022. The results indicate that ESG performance significantly promotes green innovation within traditional energy companies. The mechanism test’s findings reveal that ESG performance impacts green innovation via three key pathways: innovation investment, external monitoring, and government subsidies. Furthermore, further analysis reveals that the intense market competition environment positively moderates the effect of ESG performance enhancement on the extent of green innovation. This implies that, by improving their ESG performance, traditional energy companies can enhance their green innovation and green transformation efforts. Moreover, this impact is particularly pronounced among state-owned enterprises.

IntroductionCorporate ESG (Environmental, Social, and Governance) performance has become a key factor in achieving sustainable and healthy development, as well as enhancing financial performance. This study examines the impact of corporate ESG performance on financial performance in the Chinese market, providing empirical evidence for its influence and implications.MethodsUsing panel data from Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2009 to 2022, this study employs econometric models to analyze the relationship between ESG performance and financial performance. Endogeneity and robustness tests are conducted to ensure result reliability. Additionally, moderating effects and heterogeneity analyses are performed to explore influencing factors.ResultsThe findings indicate that corporate ESG performance significantly enhances financial performance. This conclusion holds after accounting for endogeneity and robustness tests. Further analysis reveals that financing constraints positively moderate the ESG-financial performance relationship, whereas corporate innovation focus has a negative moderating effect. Heterogeneity analysis shows that the positive impact of ESG performance is more pronounced in enterprises located in eastern regions, state-owned enterprises, and high-pollution industries.DiscussionThis study provides empirical evidence from China, demonstrating the critical role of ESG in corporate financial performance. The results offer valuable insights for policymakers, investors, and corporate managers aiming to promote sustainable development and optimize investment strategies.

We attempt to explore the impact of ESG (Environmental, Social, and Governance) performance on firms from a comprehensive and peer comparison perspective. We constructed a composite index encompassing profitability, growth, and security, and compared it with the median of peers to ultimately form a quality index for enterprises. Empirical results indicate that ESG performance contributes to improving the quality of firms and exhibits a certain degree of persistence. Among the three components, governance performance has the greatest impact, followed by social performance, while environmental performance is not significant. Mechanism research shows that ESG performance enhances corporate quality by alleviating financing constraints and improving labour productivity. Further analysis reveals that the more ESG investors there are, the weaker the impact of ESG performance on corporate quality; the better the financial fundamentals of a company, the greater the impact of ESG performance on corporate quality; and when firms operate in more competitive market environments, the impact of ESG performance on quality improvement is more pronounced.

ABSTRACTThis study addresses whether the positive consequences of corporate innovation can mitigate the negative repercussions of earning management practices on corporate sustainability. Specifically, it investigates the impact of real earning management (REM) practices on corporate environmental, social and governance (ESG) performance. Likewise, it explores the mediating role of corporate innovation inputs and outputs in this relationship. The study uses a sample of the A‐share listed firms in the Chinese stock market from 2011 to 2021. We measure REM activities as a comprehensive index of corporate abnormal cash flows, abnormal production costs and abnormal discretionary expenses. The Chinese firms' ESG performance is based on Huazheng's ESG rating. Corporate innovation is categorised into innovation input (i.e., R&D expenditure) and innovation output (i.e., patent applications). The study finds that REM practices inversely affect corporate ESG performance and its various pillars. Likewise, firms that engage in higher REM practices are less likely to allocate resources to innovation (i.e., lower R&D expenditure) and have a low innovation output (i.e., fewer patent applications). Nevertheless, firms with higher innovation input and/or higher innovation output exhibit higher ESG performance. Finally, the corporate innovation input and output mediate the relationship between REM practices and ESG performance, suggesting that the positive influence of innovation on ESG performance helps to mitigate the negative consequences of earnings management practices. These results underscore the significance of ethical financial practices and innovation‐driven strategies in enhancing corporate ESG performance.

The conformity effect of ESG performance in supply chain networks

ESG performance, investor attention, and company reputation: Threshold model analysis based on panel data from listed companies in China

Many experts have recently focused on the relationship between ESG performance and company performance. Most studies on the Chinese market have found a strong link between ESG and company performance, but only few have examined the mechanism. Moreover, a few studies have examined the impact of property rights and the theoretical frameworks that support them. This paper adopts firm fixed effects regression and year fixed effects regression to analyze 1,595 listed Chinese enterprises with 12,760 observations. The results show that ESG enhance the corporate performance partly by reducing the level of asymmetric information, and the mediated effect of asymmetry information on corporate performance is weakened for state-owned companies. These findings suggest that by enhancing ESG performance, businesses can reduce the level of asymmetric information and boost performance. Furthermore, state-owned companies gain more credibility due to social trust. However, this effect is not as strong as it is for non-state-owned enterprises

This paper examines whether and how the network centrality of institutional investors affects firms’ sustainability development. Using data from the Chinese market, we find that central institutional investors in the social network significantly increase firms’ overall ESG performance. For the environmental, social, and governance pillars of ESG, we find that environmental performance is more likely to be driven by central institutional investors. We further show that central institutional investors act as active monitors and resource providers, enhancing firms’ ESG performance by improving corporate internal control quality, promoting the corporate information environment, alleviating financing constraints, and increasing green innovation capability. Furthermore, the relationship between centrality and ESG performance is considerably more pronounced for firms with political connections or under a high degree of industry competition but more diminished in periods of high economic policy uncertainty.

Green innovation helps companies achieve high-quality sustainable development, and environmental, social responsibility and corporate governance (ESG) performance impacts enterprises’ green innovation capability. Taking the data from 2011 to 2021 of Chinese A-share listed companies as the research sample, this paper empirically tests the impact of corporate ESG performance on green innovation and explores the impact mechanism. Measuring firms’ ESG performance through ESG score given by a third-party rating agency, this paper finds that better ESG performance enhances firms’ green innovation capability. Based on the double externality of green innovation, we find that better ESG performance of enterprises can enhance their green innovation capability by incentivizing firms in the same industry to innovate, strengthening external supervision, and alleviating financing constraints. As an important informal system in China, Confucianism has a certain inhibitory effect on firms’ green innovation capability. This paper provides a decision-making reference for the effectiveness of ESG in the Chinese market and corporate green sustainable development by investigating the impact mechanism of ESG performance on corporate green innovation capability.

Recently, many experts have focused on the relationship between ESG performance and firm performance. Most studies on the Chinese market have discovered a strong link between ESG and company performance, but only a few have looked into the mechanism. Additionally, just a few studies examine the impact of property rights and the theoretical foundations that support them. This paper adopts firm fixed effects and year fixed effects regression to analyze 1,595 of China’s listed enterprises with 12,760 observations. The results indicate ESG enhanced the corporations’ performance partly by reducing the asymmetric information level, and the mediated effect of asymmetry information on corporations’ performance is weakened for state-owned companies. These findings suggest that by enhancing ESG performance, businesses may reduce asymmetric information levels and boost performance. Furthermore, state-owned firms receive more trust due to social trust; therefore; however, this effect is not as strong as it is for non-state-owned enterprises.

An investigation into the relationship between ESG performance and firm value is vital for formulating corporate sustainability strategies. This paper begins by providing a comprehensive overview of the ESG performance across all listed companies in the Chinese stock market. It then examines the effect of a firm’s ESG performance on its firm value, with a particular focus on the heterogeneity within various industries. Our results demonstrate that ESG performance standards are positively correlated with the firm value. Enhancements in ESG performance can significantly bolster a firm’s sustainability. Nevertheless, the degree and direction of the impact of corporate ESG performance on firm value are subject to variation across industries. These results have significant implications for the refinement of corporate ESG practice initiatives and ESG-oriented investors, inspiring them to consider the industry classification of firms in their operational and investment strategies related to ESG.

This study examined the data of Chinese A-share listed companies from 2013 to 2022 to investigate the relationship between corporate environmental, social, and governance (ESG) performance and foreign direct investment (FDI). Unlike previous studies, this study explored the mechanism between ESG performance and FDI from the perspective of investor confidence. We found that ESG performance promotes FDI and drives foreign investment into the Chinese market by boosting investor confidence. Notably, the impact was more pronounced in high-tech and manufacturing sectors. The results suggest that as global investors become more concerned about ESG, companies should focus on improving ESG performance to enhance investor confidence. This will help companies attract foreign investment while gaining competitive market advantages.

Is managerial myopia detrimental to corporate ESG performance?

With the improvement of the Chinese capital market in terms of regulation system and overall maturity, the significance of the ESG concept to the capital market has been rising accordingly, becoming an important source of corporate signals. In this context, ESG value investment has gradually received attention from academia and the market and a lot of discussions have been conducted on ESG and corporate value, but there are still many differences in the research on the relationship and mechanism of the two. The academic argument of ESG governance's function has been reflected in the capital market that most Chinese listed companies neglected ESG governance, and less than a quarter of them have made the disclosure on this basis. Hence, In context to this background, this paper explores the correlation between ESG performance and enterprise value as well as explains the mechanism of this effect by constructing a multiple linear regression model with sample companies from the A-share capital market. It is found that ESG performance is significantly and positively correlated with enterprise value, for every 1% increase in ESG performance, enterprise value will increase by 7.2% on average. This correlation also has been proved by this paper that can be explained by the contribution of better economic performance and a financing environment led by good ESG performance.

As a comprehensive indicator that measures the three dimensions of enterprise environment, society and corporate governance, the role played by ESG performance in the internationalization process of enterprises deserves attention. Based on this, this article takes A-share listed companies in Chinese capital market from 2009 to 2022 as a sample to empirically test the impact of ESG performance on corporate internationalization. The study found that good ESG performance can significantly improve the degree of corporate internationalization. The heterogeneity analysis shows that when the external information environment of a company is better, ESG performance plays a more significant role in promoting corporate internationalization. This article enriches the research on the role of corporate ESG performance, and at the same time has certain enlightenment significance on how to promote corporate internationalization, and help multinational companies in developing countries carry out foreign business activities, convey a responsible corporate image and a big country image to the world, and be conscious of the destiny of mankind. The concept of community has important implications.