Abstract
A good ESG rating is a positive indicator of a company's high quality and helps to discipline corporate behaviour, thereby reducing the phenomenon of financial restatement. This paper examines the impact of ESG ratings on financial restatement and conducts further heterogeneity analysis in an attempt to find new ways to improve corporate financial performance. The findings show that there is a significant negative relationship between ESG rating and financial restatement. The results of the heterogeneity analysis indicate that the inhibitory effect of ESG rating on financial restatement gradually increases when the solvency or equity concentration of a company increases. The findings of this paper help listed companies to understand the importance of ESG rating results and make reasonable use of ESG rating information to reduce the possibility of financial restatement, and then explore the potential impact of ESG rating on the internal financial behaviour of listed companies in China.
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