The impact of ESG on management tone: Empirical evidence from China

Abstract

This paper examines the effect and mechanism of ESG (Environmental, Social, and Governance) performance on management tone from the perspective of psychology and behavioral finance. The study found that ESG performance can significantly improve the enthusiasm of managers’ intonation, which is more obvious when the population density of the enterprise is higher. The mechanism analysis shows that the ESG performance of enterprises mainly affects the tone of managers through two channels: reducing financing constraints and improving financial performance. This paper examines the internal logic of ESG practice on managers’ emotional tendencies from the perspective of psychology and behavioral finance, and reveals that ESG practice does not make managers become negative.