The impact of female executives on corporate governance: evidence from Chinese-listed companies

ESG practices and the cost of debt: Evidence from EU countries

This study focused to understand the impact of the social pillar of ESG (Environmental, Social, and Governance) practices on the sustainability of organizations. A systematic review of the literature was carried out and the analysis of these articles revealed that in recent years investors have shown a growing interest in ESG, guided by financial value. ESG data, scientifically grounded and focused on investments, offers greater transparency to investors, but faces challenges in defining metrics due to the distinct nature of the three pillars. Companies with better ESG performance also contribute to community development. However, the social dimension of ESG has received less attention than the environmental and economic dimensions. Human-centric organizations that use ESG practices make an impact on the environment by implementing sustainable measures that reduce health risks and workload. In the social sphere, labor management, diversity and inclusion programs increase satisfaction and productivity at work. In corporate governance, improved strategies should consider employees' occupational stress and gender diversity in senior management and boards, as it plays a key role in ESG disclosure and performance. There are gaps in the literature regarding the three ESG pillars, especially regarding the social dimension and diversities. The lack of academic consensus on the impact of engaging in ESG practices indicates the need for more studies and empirical research to advance knowledge about ESG and sustainability in organizations. Overcoming these limitations can allow for a better understanding and effective implementation of ESG practices, boosting organizational sustainability.

The challenge of Environmental, Social and Governance (ESG) has been identified as being inextricably linked to organisational culture, with these aspects being embedded within the company’s values and practices. The companies’ commitment in promoting sustainability, diversity and ethics in their activity is considered to be a prerequisite for effective performance in relation to all categories of stakeholders. The increased interest in the relationship between ESG and financial performance has led to a substantial volume of research. This paper’s objectives are to broaden the discussions of the relationship between ESG and financial performance, through a bibliometric analysis of 1461 articles. The following themes were identified as the primary subjects of research: corporate disclosure of ESG information and financial performance; ESG, volatility, risk and return; corporate ESG performance and dividend payment; the financial performance indicators in association with ESG performance; ESG, development, innovation, digitisation; ESG performance and earnings management; and ESG controversies and business performance. The trends in the research of the topic concerned the particularities of the relationship between the variables in times of crisis, the correlation between the variables moderated by reporting, the analysis of different ESG ratings, green financing, the particularities in the banking system, materiality and sectoral particularities, as well as ESG disclosure and corporate financial flexibility. The results of the study enhance understanding of this relationship, being useful to both stakeholders and scholars, identifying trends and tendencies in this issue, and providing directions for future studies to establish the determining factors and performance practices.

Purpose Using data gathered on Standard & Poor’s 500-listed companies between 2012 and 2023, this paper aims to examine the effect of institutional ownership on the overall environmental, social and governance (ESG) score, as well as on the E, S and G disclosure scores separately. It also compares disclosure processes within industries, with and without emissions and examines the role of board composition in mediating the relationship. Design/methodology/approach A fixed-effects panel-data regression model is used to examine how institutional ownership affects ESG disclosure. Various versions of this model are used to understand if institutional ownership affects E, S and G disclosure scores differentially. Findings Institutional investors significantly influence overall ESG disclosure in sectors that are highly visible or subject to regulatory and societal scrutiny, such as utilities, consumer staples and industrials. The impact of institutional holding is more significant for governance disclosure than for environmental and social disclosures. The authors also highlight the positive impact of female board members on overall ESG disclosure, and E, S and G disclosures in the US majority stock sectors. Practical implications This study bridges finance, sustainability and governance, offering insights into how institutional investors influence ESG disclosure across industries. It highlights the need for proactive ESG reporting across the industrial, utilities and consumer goods sectors to align with investor expectations, emphasizes the strategic role of board gender diversity and advises balancing financial goals with ESG transparency in less regulated sectors to mitigate reputational risks. Originality/value Much of the current literature on the role of institutional investors in ESG performance has been centered on their ability to enhance a firm’s ESG performance. Specifically, contemporary literature addresses their role in environmental performance, but studies are scarce on their role in governance, social and overall ESG performance. Existing research has not sufficiently explored how institutional ownership affects the quality of ESG reporting across all three pillars. Only a limited number of studies analyze the E, S and G factors together to identify which dimension benefits most from institutional shareholding. In line with this, the study uniquely examines how institutional ownership affects overall ESG reporting quality and analyzes the individual contributions of the E, S and G factors to identify which dimension is most influenced by institutional holdings.

With the establishment of China’s “dual carbon” target and the promotion of high-quality development strategy, the role of green innovation has become increasingly important. Corporate ESG innovation, as a guiding principle for companies to practice sustainable development and an important signal for evaluating their environmental and social responsibilities as well as corporate governance level, deserves in-depth research on its impact on green innovation performance. This paper empirically analyzes the green innovation effect of corporate ESG (Environmental, Social and Governance) performance using Chinese A-share listed companies as a sample from 2009 to 2021. The research shows that corporate ESG performance can enhance green innovation performance. Mechanism analysis reveals that ESG performance mainly improves green innovation performance by alleviating financing constraints and enhancing human capital. Further research shows that all three sub-dimensions of ESG performance contribute to improving green innovation performance, with the strongest effect observed in corporate governance performance. ESG performance not only enhances strategic green innovation performance and independent green innovation performance but also improves substantial green innovation performance and collaborative green innovation performance. Therefore, the government should improve the ESG information disclosure system, increase support for companies with excellent ESG performance, and improve local talent policies to attract high-quality green innovation talents. Investors should incorporate ESG performance into their decision-making and strengthen the identification and use of ESG information. Companies should formulate ESG strategies, increase relevant investments, prioritize corporate governance improvement, and enhance the quality of ESG information disclosure through various means.

Non-technical summary The research paper studies business sophistication, tax revenue policies, and ESG (Environmental, Social, and Governance) performance across 105 Belt and Road Initiative (BRI) countries spanning from 2013 to 2021. Key insights from the study underscore a positive association between business sophistication and ESG performance. This suggests that organizations leveraging advanced knowledge and innovation are better positioned to implement effective ESG strategies. Moreover, higher tax revenue is linked to better ESG, underlining a commitment to sustainability within the business landscape. Notably, Information, Communication, and Technology (ICT) emerges as a pivotal catalyst in augmenting ESG performance, particularly when integrated with business sophistication and tax revenue mechanisms. Technical summary This study examines the relationship between business sophistication, tax revenue policies, and ESG (Environmental, Social, and Governance) performance in 105 Belt and Road Initiative (BRI) countries from 2013 to 2021, focusing on the moderating role of Information, Communication, and Technology (ICT). Using advanced econometric methods like Two-Stage Least Squares (2SLS), two-step Generalized Method of Moments (GMM), and fixed-effect regression, the research also considers factors such as microfinance institutions, commercial bank financing, and the COVID-19 pandemic. The findings reveal a significant positive link between business sophistication and ESG performance, indicating that companies with advanced knowledge and innovation are more likely to implement successful ESG policies. Higher tax revenue is also positively correlated with ESG improvements, reflecting support for sustainability. ICT is crucial in enhancing ESG performance, especially when combined with business sophistication and tax revenue. Microfinance and commercial banking are vital in promoting ESG practices in BRI countries. Despite a temporary decline in ESG performance due to COVID-19, the study predicts a post-pandemic resurgence, emphasizing the need to foster an innovation culture for sustainable development. Social media summary There is a positive association between business sophistication, tax revenues, microfinance, ICT, and commercial banking, which are key drivers of better ESG performance in BRI countries.

Manuscript type: Research paper Research aims: The study aims to investigate the extent and level of environmental, social and governance (ESG) performance of listed companies in Thailand, and test for the relationship between ESG committees and performance. Design/methodology/approach: Using the top 100 Thai listed companies (364 firm-year observations) from the Stock Exchange of Thailand (SET), the corporate annual reports during 2018 to 2021 are used to collect ESG board committee characteristics, while ESG performance is collected and measured by ESG scores from S&P Capital IQ and Capital IQ Pro databases. Descriptive analysis, correlation matrix, and multiple regression are used to analyse the data. Research findings: The average performance score of ESG in Thailand is 29.52. In addition, there was an increase of ESG performance by the top 100 firms in Thailand during the period under study. There is a significantly positive relationship between independent ESG committees and ESG performance, while dual positions between top management and ESG committees is negatively correlated with ESG performance. Theoretical contribution/originality: The findings of the relationship between ESG committees and performance demonstrates that agency theory can be used to explain the factors influencing ESG performance by Thai listed companies.

<p><b>This thesis investigates the relationship between cross-country mandatory environmental, social and governance (ESG) regulations and firm-level outcomes, such as ESG performance, corporate finance, and investment, for both developing and developed countries. ESG performance is initially examined to determine whether mandatory ESG regulations affect it and to what extent. Second, the study investigates the impact of mandatory ESG on corporate finance and investment. Lastly, the study explores whether mandatory ESG regulations affect firm-level outcomes based on countries' governance and economic systems, and industries. The study uses a large sample of 69,010 firm-years across 73 countries, over the period 2005 – 2020 to address the foregoing issues.</b></p> <p>In addressing the impact of mandatory ESG regulations on ESG performance, the study employs a difference-in-differences (DiD) design. The DiD technique can isolate the effect of regulatory shocks to firm-level outcomes. According to the DiD analysis conducted, cross-country mandatory ESG improves firm-level ESG performance in developed countries, but not in developing countries. The study also concludes that mandatory ESG regulations have a positive impact only on ESG components in developed countries and have a more dominant impact on environmental (E) component. The findings are robust to a range of checks and test cases, including a triple DiD design set-up and propensity score-matched sample.</p> <p>The study employs an investment Euler equation framework and generalised method of moments (GMM) estimators to explore how mandatory ESG impacts corporate finance and investment. Euler frameworks account for the dynamic nature of investment, whereas GMMs account for endogenous dynamics in dynamic models. The study demonstrates that mandatory ESG increases corporate investment by increasing firms' access to external funds. The findings are robust to a battery of tests, including a triple DiD design set-up, propensity score-matched sample and the parallel trends assumption.</p> <p>Using an investment Euler equation framework and the GMM estimators, the study explores whether the impact of mandatory ESG on corporate finance and investment is dependent on a country's governance and economic system. When mandatory ESG is affected by country factors such as governance systems and economic well-being, the effect of mandatory ESG on investment via internal finance channel persists, according to the study. However, while consistent results are found in developed countries, inconsistent results are found in developing countries. According to the study, oil, gas, and mining firms are likely to respond effectively to mandatory ESG regulations because of increased scrutiny and pressure.</p> <p>Overall, the findings from the study imply that cross-country mandatory ESG has had a positive impact on corporate ESG performance, finance, and investment. For firms located in developed countries, these findings hold consistently, while for those located in developing countries, the opposite holds true. Also, the study reveals that firms in the oil, gas, and mining industries effectively respond to regulatory requirements. As a result, this study provides policy makers and accountants with an understanding of how mandatory ESG impacts firm ESG activities and performance, which is crucial for regulatory reforms.</p>

Environmental, Social and Governance (ESG) has become an important framework for assessing corporate function, governance, sustainability, and the competitiveness of corporations, as companies are increasingly looking for a path towards sustainable development and invest responsibly. ESG indicators reflect not only a company’s environmental responsibility and social contribution, but also the quality of its governance and a company’s strategic sustainability. This study reviews the literature on corporate governance, corporate social responsibility (CSR), and ESG performance and investigates its association with the performance of Chinese-listed firms. Through integrating the existing literature and analysis of ESG disclosure from Chinese listed companies we propose to investigate the theoretical connection between corporate governance and sustainable corporate performance via ESG practices. The results imply that a well-structured corporate governance plays a major role in achieving increased ESG performance, in which corporate reputation in turn enhances its status while also lowering the operating risk and enhancing long-term financial output. Furthermore, corporate sustainability reports reveal that ESG strategies have emerged as a part of businesses and governance constructs developed by leading Chinese companies. The article also addresses the implications of ESG governance on sustainable corporate development, presents suggestions for enhancing ESG disclosure and governance systems in Chinese firms.

This research explores the disclosure of Environmental, Social and Governance (ESG) factors and their relationship with company performance. This research argues that ESG disclosure can influence a company's reputation, financial performance, analyst forecast accuracy, market valuation, and corporate decisions. By using ontological, epistemological and axiological approaches in the field of accounting, this research aims to understand the relationship between ESG disclosure and company performance. The literature review method was used to identify and evaluate relevant previous research. The findings indicate that there is a consensus in the literature regarding the positive relationship between ESG disclosure and corporate financial performance. This research also combines the ESG Rating Model and Environmental, Social and Governance indicators developed by MSCI to assess companies' ESG performance. A philosophical understanding of ESG in terms of ontology, epistemology, and axiology—which relate to the nature of reality, theories of knowledge, and values—reveals that ESG is closely related to moral, economic, and social values, as well as factual and normative knowledge. This research concludes that companies that integrate good ESG practices not only fulfill their social and environmental responsibilities but also achieve better financial performance, emphasizing the importance of ESG as a strategic consideration in business and investment decision-making and the long-term survival of companies.

Purpose This paper aims to empirically assess the effect of hospitality firms’ digital dynamic capabilities (DDC) on their corporate digital responsibilities (CDR) and the subsequent impact on their environmental, social and governance (ESG) performance. Specifically, it examines how CDR practices shape ESG digitization and performance in the hospitality industry. Design/methodology/approach The authors collect cross-sectional data via the online survey platform, gathering responses from 257 hotel firms across 42 countries and estimate the structural paths using partial least-squares (PLS) structural equation model. To reduce unobserved heterogeneity for robustness, the authors additionally implement finite mixture PLS (FIMIX-PLS), supported by a post hoc power analysis conducted through G*Power. Findings The results indicate that the three elements of DDC – digital sensing, digital seizing and digital reconfiguring – positively affect substantive and symbolic CDR of hospitality firms. Both CDRs simultaneously contribute positively to firms’ ESG digitization, whereas their direct effect on ESG performance is found to be insignificant. Given the positive impact of ESG digitization on ESG performance, this indicates that ESG digitization acts as a mediator, bridging the impact of both CDRs on ESG performance. Thus, DDC elements enhance CDRs, which, in turn, influence ESG performance indirectly through ESG digitization. Research limitations/implications The empirical support for the interconnected relationship between DDC, CDR and ESG performance provides hospitality and tourism managers with the latest understanding of the mechanism by which they can enhance sustainability performance. Originality/value This study addresses a significant gap in the prior literature by investigating how substantive and symbolic CDR practices differently impact ESG outcomes in the hospitality industry. From a dynamic capability perspective, the study integrates the concept of DDC with ESG and highlights their role in enhancing the effectiveness of CDR practices.

PurposeEnvironmental, social and governance (ESG) factors have become increasingly important in investment decisions, leading to a surge in ESG investing and the rise of sustainable investment assets. Nevertheless, challenges in ESG disclosure, such as quantifying unstructured data, lack of guidelines and comparability, rampantly exist. ESG rating agencies play a crucial role in assessing corporate ESG performance, but concerns over their credibility and reliability persist. To address these issues, researchers are increasingly utilizing machine learning (ML) tools to enhance ESG reporting and evaluation. By leveraging ML, accounting practitioners and researchers gain deeper insights into the relationship between ESG practices and financial performance, offering a more data-driven understanding of ESG impacts on business communities.Design/methodology/approachThe authors review the current research on ESG disclosure and ESG performance disagreement, followed by the review of current ESG research with ML tools in three areas: connecting ML with ESG disclosures, integrating ML with ESG rating disagreement and employing ML with ESG in other settings. By comparing different research's ML applications in ESG research, the authors conclude the positive and negative sides of those research studies.FindingsThe practice of ESG reporting and assurance is on the rise, but still in its technical infancy. ML methods offer advantages over traditional approaches in accounting, efficiently handling large, unstructured data and capturing complex patterns, contributing to their superiority. ML methods excel in prediction accuracy, making them ideal for tasks like fraud detection and financial forecasting. Their adaptability and feature interaction capabilities make them well-suited for addressing diverse and evolving accounting problems, surpassing traditional methods in accuracy and insight.Originality/valueThe authors broadly review the accounting research with the ML method in ESG-related issues. By emphasizing the advantages of ML compared to traditional methods, the authors offer suggestions for future research in ML applications in ESG-related fields.

Purpose The term environmental, social and governance (ESG) has gained momentum in recent years. Thus, understanding its underlying driving mechanisms has become increasingly intriguing. In this study, we examine the effects of economic policy uncertainty (EPU), climate policy uncertainty (CPU) and geopolitical risk (GPR) on firms’ ESG disclosure. Design/methodology/approach To achieve the paper’s goal, we use the mixed data sampling (MIDAS) regression model on a sample of 500 firms from the US stock market. Findings The results indicate that EPU and GPR have significant adverse effects on ESG performance, whereas the CPU index exhibits a positive impact. However, the significant associations of CPU and GPR with ESG score observed in the whole sample do not hold consistently across industries. This suggests that, while overarching trends might exist, individual sector characteristics and varying external influences can shape the relationship between uncertainty factors and ESG performance. This highlights the importance of context when analyzing ESG practices across different industries. Furthermore, we identified a range of influential financial parameters that drive ESG practices. Practical implications The findings of our study have significant implications for many parties including policymakers, managers, governments, investors and shareholders. Additionally, sector-specific policies may be needed to encourage sustainable practices, particularly in industries sensitive to environmental and geopolitical risks. Originality/value The paper’s originality lies in its examination of the combined impact of EPU, CPU, and GPR on ESG disclosure – a relationship rarely explored in existing literature. Using the MIDAS model, it provides a more refined analysis by integrating both high- and low-frequency data. The study also offers industry-specific insights, revealing how these external uncertainties affect ESG disclosure differently across sectors. By incorporating financial drivers and offering policy implications, this research presents a novel and comprehensive approach to understanding ESG disclosure under increasing global uncertainties.

ABSTRACTWe empirically examine how market competitiveness, which is subject to the influences of globalisation, affects Chinese firms' ESG (environmental, social and governance) performance. We acquire detailed information on A‐share listed Chinese firms between 2011 and 2020 and use foreign tariff shocks as instrumental variables of market competitiveness to control for endogeneity. We find that a higher market concentration (i.e., a lower level of market competition) significantly improves firms' ESG ratings. This finding remains robust under various instrumental variables of globalisation influences, various measurements of market competitiveness, various measurements of ESG and various empirical methods. Our mechanism analysis further reveals that market concentration takes positive effects primarily on state‐owned firms' ESG, especially their corporate governance. We attribute this finding to the Chinese characteristics of economy, where government power‐ and state‐owned firms play crucial roles. By studying determinants of Chinese firms' ESG performance by their ownership structures, we fill an important literature gap and provide a better understanding of the Chinese economy.JEL Classification: L22, F18, F43, Q56

Purpose We aim to construct the environmental, social and governance (ESG) ranking based on voluntary disclosures in an emerging market where ESG ratings are unavailable and investigate the factors influencing a firm’s ESG ranking. Design/methodology/approach We analyzed ESG disclosures on corporate webpages and annual reports for firms listed on the Pakistan Stock Exchange (PSX) and ranked the firms on ESG dimensions. Further, we examined the impact of the firm’s financial characteristics on ESG performance using panel regressions for 2017–2022. Findings Firms’ disclosures were strongest in the governance dimension but weaker in environmental and social dimensions. Our ESG rankings show banks as the highest and refineries as the lowest-ranked sectors. Regression analysis indicates that firms with strong financial performance and low leverage performed better across ESG dimensions. While the overall impact of ESG rankings on firm performance is unclear, stronger environmental rankings seem to offer a competitive advantage. Practical implications As global capital markets move towards sustainable investing, ESG rankings can help Pakistan to attract foreign inflows. Further, findings on poor disclosures on environmental and social dimensions highlight the need for a standardized ESG reporting framework to make firms’ sustainability efforts more transparent to stakeholders. Social implications Measurement and availability of ESG rankings will increase ESG awareness in investors and will encourage companies to allocate resources towards sustainable business practices. Originality/value This research is the first attempt to gauge the ESG performance of PSX-listed firms and identify the firm characteristics indicative of ESG performance in an emerging market context.