Regional Heterogeneity Analysis of ESG and Corporate Value

Abstract

Environment, social and governance ratings (ESG) has now become an important indicator for assessing corporate value. However, due to the varying degrees of economic growth, environmental protection policies, and sociocultural climates in various Chinese locations, there are significant regional differences in the correlation between ESG data and corporate value. This paper conducts a regression analysis of corporate value and ESG data from the three pillars of environment, society and governance to verify that ESG advantages significantly enhance corporate value. This paper also looks at the heterogeneous characteristics of the regional distribution of Chinese firms, the degree of marketization, and the relationship between firms and the government to show the mechanism by which regional differentiation affects the ESG score-Firm value correlation. A corporate valuation logic based on ESG scores is also established. Finally, the conclusions of this study have significant policy ramifications for the current stage of enterprise development. For enterprises, they need to continuously improve the level of ESG management and formulate management measures in line with the current situation of enterprises according to the heterogeneous differences that exist in the region, so as to improve the ability to cope with the enterprise crisis.