The Impact of ESG on Management Tone: Empirical Evidence from China

Abstract

This paper aims to delve into the effects and mechanisms of ESG (Environmental, Social, and Governance) performance on management tone, taking a comprehensive view from psychology and behavioral finance. The studys findings shed light on the considerable impact of ESG performance on enhancing managers enthusiasm in their speech. Interestingly, this effect is more pronounced in enterprises operating in densely populated areas. Through a meticulous mechanism analysis, it is determined that ESG performance primarily influences managers tone through two key channels: alleviating financing constraints and bolstering financial performance. By delving into the internal logic of ESG practices on managers emotional tendencies, this paper contributes to the existing literature from both psychological and behavioral finance perspectives. Notably, it unveils the fact that managers do not adopt a negative demeanor as a result of ESG practice. On the contrary, ESG practices have the potential to foster a positive and constructive atmosphere in managerial communication.