The impact of corporate ESG performance on buyers’ bargaining power in the industrial chain: Evidence from China

Abstract

This study investigates whether ESG performance improves the buyers’ bargaining power of listed enterprises in the industrial chain using a sample of Chinese A-share listed enterprises from 2009∼2021. Measuring buyer's bargaining power with a new trade-credit-based method, we find a positive relation between ESG performance and buyers’ bargaining power in the industrial chain, which is robust to a series of robustness tests. Cross-sectional analysis indicates that this positive effect is more substantial for listed enterprises after China joined the Paris Agreement, for listed enterprises facing stronger competition and for listed enterprises with less analyst coverage. Overall, this study elucidates the economic benefits of enterprises’ environmentally and socially responsible behaviours and the determinants of enterprises’ bargaining power in the industrial chain.