Abstract
Firms' environmental, social, and governance (ESG) performance plays an essential role in the green finance market. It helps firms gain favor with responsible investors and reduces their financial constraints. To examine the impact of ESG performance on the skill premiums of firms in China's Green Finance Reform Pilot Zone (GFPZ), this paper uses the data of Chinese listed firms from 2015 to 2021 and constructs a difference-in-differences model. Our findings suggest that the ESG performance of firms in the pilot zone has a significant positive impact on their skill premiums, and the GFPZ policy increases firms' skill premiums by alleviating financial constraints and promoting green innovation. Furthermore, the heterogeneity analysis shows that the GFPZ policy has a more significant facilitating effect on firms in highly urbanized areas, those with low levels of digitization, and those that are non-state-owned.
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