The impact of common ownership between banks and firms on corporate ESG performance: Evidence from China

The relationship between Environmental, Social, and Governance (ESG) performance and corporate financial performance is crucial for sustainability in listed companies. This study examines the impact of ESG performance on the financial outcomes of A-share listed companies in China from 2006 to 2022. Employing return on assets as an indicator of corporate financial performance, the analysis utilizes a two-way fixed effects model to explore the direct effects of ESG performance and the mediating role of financing constraints. The results demonstrate that robust ESG performance significantly enhances financial performance. Effective ESG management can also alleviate financing constraints, thereby boosting financial outcomes. Additionally, the study reveals that the positive impacts of strong ESG performance are more pronounced in non-state-owned enterprises and companies not primarily monitored for pollution, though benefits are observed across various ownership types and pollution levels. These findings offer valuable insights for policymakers aiming to refine ESG frameworks and for corporations seeking to enhance their ESG engagement to boost financial performance.

Corporate culture and ESG performance: Empirical evidence from China

This paper focuses on manufacturing enterprises, exploring the impact and mechanism of ESG performance on stock prices. Based on data from 2015-2022, empirical analysis reveals the industry and enterprise heterogeneity in ESG performances impact on stock prices. The research finds that ESG performance has a more significant stock price-boosting effect for highly polluting enterprises, primarily due to the markets higher valuation of marginal environmental governance improvements in high-pollution companies. State-owned and foreign-funded enterprises excel in ESG practices, with significantly higher ESG scores compared to private enterprises. Foreign-funded enterprises, due to international operational requirements, demonstrate more concentrated ESG performance and higher stock price stability. Further mechanism analysis indicates that ESG performance significantly enhances corporate financial performance through multiple channels, including optimizing financing structure, reducing financial risks, and improving cash flow conditions, thereby positively influencing stock prices. Specifically, good ESG performance can lower asset-liability ratios, optimize cash outflow structures, and improve net operating cash flow, thus enhancing enterprise market competitiveness and stock price stability. This study provides theoretical support for corporate ESG practice strategic planning and offers important references for investor decision-making and policy formulation. The research results demonstrate that ESG performance is not only a crucial manifestation of corporate social responsibility but also a key factor in improving financial performance and market competitiveness.

Companies now have to deal with increasingly complicated and wide-ranging social duties in light of the real economy's deep integration and the fast expansion of digitalization. This research builds a double-difference model and applies it to China's National Prototype Area for the Progressive Growth of the Digital Economy to empirically examine how regional digitalization affects companies' ESG performance. The data used in the analysis is from 1178 A-share listed companies in the Shanghai and Shenzhen markets from 2013 to 2022. This study discovered that by increasing risk resilience, increasing the number of social contributions, and boosting corporate environmental information disclosure, regional digital construction may enhance corporate ESG performance. Furthermore, the improvement of digital construction on business ESG performance is more evident in regions where public environmental concerns are stronger. In addition, companies with higher executive environmental awareness than lower executive environmental awareness saw a greater contribution from regional digital construction to corporate ESG. In addition, this paper addresses the criticisms leveled at corporate environmental and social responsibility (ESG) by confirming that the disclosure of corporate ESG reports is driven more by corporate sustainability than by self-serving management, as measured by the company's real environmental behavior and information manipulation. Promoting businesses' active engagement in ESG practices via the potential of digital growth is crucial for developing nations.

Against the background of the impact of multiple uncertain events, such as COVID-19, the Russia–Ukraine conflict, and China–US trade frictions, it is of great strategic significance for enterprises to achieve their own sustainable development by improving ESG (environmental, social, and internal governance) performance. Using the data of Chinese A-share listed companies from 2011 to 2020, this paper empirically explores the effect of economic policy uncertainty (EPU) on corporate ESG performance. We obtain the following results: (1) EPU can promote firms to enhance ESG performance, and in each sub-item of ESG performance, EPU has the strongest promotion effect on corporations’ environmental performance (E), followed by social responsibility performance (S), while EPU has a relatively weak promotion effect on internal governance performance (G). (2) The mechanism test results show that EPU will exacerbate the credit risk of enterprises and then promote the improvement of enterprises’ ESG performance. (3) The grouping test results show that EPU has a stronger promotion effect on the ESG performance of state-owned enterprises, high-carbon industries, low regional marketization level, and enterprises with strong regional government intervention. Against the realistic background of the frequent adjustment of economic policies, the research results provide empirical evidence for guiding enterprises to strengthen the construction of ESG systems.

The ESG rating system has received more and more attention as an important reference for measuring corporate sustainability, and the external economic environment is considered to be an important factor affecting corporate ESG performance, however the perception of corporate economic policy uncertainty, as an important external economic environment, and how it affects corporate ESG performance has not yet been adequately investigated. This paper uses the annual report data of A-share listed enterprises from 2010 to 2020, and through a two-way fixed effects model, firstly, we carry out a benchmark regression, and then this paper carries out a heterogeneity analysis to explore the differential impact of economic policy uncertainty on enterprises by comparing the ESG scores of enterprises with different characteristics, and the mechanism study finds that economic policy uncertainty can affect the ESG performance of enterprises through the channels of enterprise digitisation and enterprise scale, in which economic policy uncertainty can influence the ESG performance of enterprises through the channels of enterprise digitisation and enterprise scale. ESG performance, in which economic policy uncertainty slows down the process of enterprise digitisation and reduces enterprise ESG performance; economic policy uncertainty cut down enterprise size and reduces enterprise ESG performance.

[Purpose]As companies worldwide are increasingly moving toward digitalization, the impact of digital transformation on corporate management and audit risk is drawing greater attention. Simultaneously, ESG performance has become an increasingly important management priority as part of a company’s sustainable development strategy. This study explores the relationship among corporate digital transformation, ESG performance, and audit fees, with a particular focus on whether ESG performance can moderate the relationship between digital transformation and audit fees. [Methodology]This study conducted an empirical analysis using a sample of A－share listed companies on the Shanghai and Shenzhen Stock Exchanges in China from 2009 to 2022. Audit fees were measured using actual audit fees and abnormal audit fees. Corporate digital transformation was measured by adding one to the frequency of digital transformation－related terms provided by the CSMAR digital transformation module, then converting this value into a logarithm. ESG performance was measured using the Huazheng ESG ratings. [Findings]First, a higher level of corporate digital transformation is associated with increased audit fees. Second, a higher level of corporate ESG performance tends to decrease audit fees. Third, through its moderating effect, ESG performance mitigates the effect of digital transformation on increasing audit fees. [Implications]From an auditor’s perspective, this study suggests that evaluating audit risk related to digital transformation, as well as developing appropriate computerized auditing techniques, training, and education, are urgent tasks. Additionally, the study demonstrates that ESG management activities can help mitigate the increased risks faced by companies and auditors due to digital transformation.

Rising concerns around environmental and social issues have led to a heightened investor focus on the ESG performance of corporations. This attention underscores the increasing relevance of ESG considerations in the decision-making processes of investors. However, as ESG investments have risen in popularity, there has also been an increase in contradictory voices. The purpose of this article is to analyze the intricate landscape of ESG investments from the perspective of investors. It aims to shed light on the implications of corporate ESG responses and how investors incorporate ESG parameters into their investment portfolios. The study reveals specific challenges namely: (1) Corporations incurring short-term costs for making transformations affecting their stability, consequently leading to possible reductions in investors' short-term returns; (2) Corporations potentially misleading investors through greenwashing strategies to enhance their ESG portrayal; (3) Requiring investors to possess comprehensive industry knowledge when incorporating ESG in risk assessment thereby adding to time constraints; (4) Existing discrepancies in ESG disclosure standards leading to inconsistencies in ESG ratings given by different agencies; (5) Tracing corporate ESG performance being complicated by its strong links to both the size and financial performance of the corporation; (6) Incorporating ESG factors into investment portfolios could introduce tracking errors and potentially compromise portfolio diversification. Therefore, it is necessary to advocate stricter regulations around ESG disclosures, refining reporting standards to enhance transparency and comparability. Additionally, there is a call for further research to better comprehend the intricate relationship between ESG and financial performance.

Corporate ESG performance and trade credit financing: Moderating effect of life cycle

This paper examined the driving factors of ESG performance in Chinese listed companies from the perspective of executive motivation and found that: (1) monetary compensation incentives and equity incentives exert a sizeable impact on enhancing corporate ESG performance, and the robustness test results remain unchanged; (2) corporate strategic change and green technology innovation play a mediating role in executive motivation and corporate ESG; (3) the promotion effect of executive monetary compensation incentives on ESG performance is more significant in state-owned enterprises and heavily polluting entities, while the impact of executives’ equity incentives on ESG performance is suppressed in state-owned enterprises; and (4) the economic effect test shows that good ESG performance has a positive economic influence of reducing a firms’ litigation risk and idiosyncratic risk. This paper provides empirical evidence for Chinese listed companies to improve ESG performance.

Corporate digital transformation provides conditions to stimulate the endogenous motivation of corporate ESG performance by helping enterprises optimize the allocation of innovation resources and reduce financing costs. This paper empirically examines the impact and mechanism of corporate digital transformation on corporate ESG performance using A-share listed companies in Shanghai and Shenzhen from 2011 to 2022 as the research sample. It is found that digital transformation significantly improves the ESG performance of enterprises and still holds after a series of robustness tests and endogeneity treatment. The results of this paper enrich the research on the economic consequences of digital transformation for real enterprises and the influencing factors of enterprises' ESG performance, which are of great revelation and reference value for promoting the digital transformation of real enterprises and constructing a new pattern of digital economy.

Does corporate ESG performance promote export resilience? New insights from risk resistance and resilience

Purpose This study aims to explore how females on committees (FOC) and committee ethnic diversity (CED) impact environmental, social and governance performance (ESGP). Design/methodology/approach This study examines 126 listed firms under the coverage of FTSE ESG Ratings in Bursa Malaysia between 2017 and 2019. This study applies partial least squares structural equation modeling (PLS-SEM) to examine the hypotheses. While the risk of common method variance is minimised using multiple data sources for the analysis, instrumental variable-free approach, i.e. Gaussian copula method which is implemented in SmartPLS 4.0 has been used to address the potential endogeneity of the model. Findings Empirical evidence demonstrates significant positive direct relationships between FOC and ESGP, as well as CED and ESGP. The argument of resource dependence theory and positive empirical results on the two direct relationships hold firm despite several committees being aggregated as one construct with the aim of providing different insights into the literature. Practical implications This study provides implications for firm leadership to consider reviewing the composition of committees by increasing female representation while striking a balance in the appointment of committee members of different ethnicities to enhance firm ESGP. Originality/value To the best of the author’s knowledge, this study adopts a holistic approach by capturing, for the first time, the female representation of audit, nomination, remuneration and risk management committees. These dimensions are further developed into a single quantifiable variable, presented as FOC. Similarly, the ethnic diversity of the respective committees is aggregated and developed into a single quantifiable construct: the CED. Unlike most existing studies that commonly use econometric software, the application of PLS-SEM in this study contributes to the limited body of corporate governance and ESG studies that use PLS-SEM.

Corporate boards are one of the crucial factors for the organization to focus on environmental, social, and governance (ESG) activities of firms. ESG operations provide insight into the social and environmental viability of companies. The impact of board structure on ESG varies per nation based on their economic situation and business policies. In developed nations, corporations implement ESG norms in their business strategies voluntarily, however, in India, these practices are mandated for a subset of companies. This became the motivation for the authors to explore the nexus between existing corporate board structure and ESG practices. The sample has been taken from the listed firms of the Nifty-500 index spanning the period of 10 years from 2012 to 2022. Dynamic panel data estimations are applied through a fixed effect model. The findings revealed that chief executive officer (CEO) duality has a significant negative relationship with ESG performance which goes against the belief of stakeholder theory. Whereas board size, board independence, and board qualification have a significant positive influence on ESG performance. Further findings revealed that board size has no significant effect on governance performance. Policymakers should enact new regulations on the CEO’s position in the organization, to make corporate governance responsible for improved sustainable and ESG performance.

ESG is the application and practice of the concept of sustainable development in enterprises, which is highly compatible with China's social and economic development strategy at this stage. At present, corporate ESG performance has become a hot spot of research and practice at home and abroad. Enterprise risk, as an important factor affecting enterprise development, lacks relevant research on the impact of enterprise ESG performance on enterprise risk, not to mention the exploration of the mechanism of the role of ESG performance on enterprise risk. This paper takes China's A-share listed companies in Shanghai and Shenzhen from 2013 to 2022 as the initial sample to study the effect and mechanism of ESG performance on corporate risk. The results of the study show that: ①good corporate ESG performance can significantly reduce corporate risk, and the conclusion still holds after the robustness test; ②mechanism analysis finds that good corporate ESG performance can reduce corporate risk by inhibiting corporate virtual investment. This paper enriches the related research on the economic consequences of corporate ESG, which helps to promote the risk management of listed companies through ESG strategies, and also provides reference for the decision-making of the government, investors and other stakeholders.