Does ESG Performance Promote High-Quality Development of Enterprises in China? The Mediating Role of Innovation Input

The effect of CEO's compensation in driving corporate ESG greenwashing: Evidence from China

This study examines the relationship between CEO compensation schemes and ESG greenwashing behavior in Chinese listed firms during the period 2013-2022. We find that a CEO's cash (equity) compensation has a significantly positive (negative) correlation with corporate ESG greenwashing behavior. From mechanism analysis, consistent with the agency problem view, firms engage in more severe ESG greenwashing behavior under a higher proportion of cash in the CEO compensation structure. Such distortion behavior is mitigated by higher internal control quality in firms having an equity incentive for their CEO under the convergence of interest viewpoint. Additional analysis reveals that corporates audited by large accounting firms and those with more media coverage exacerbate the positive correlation between CEO cash compensation and ESG greenwashing behavior, while government environmental regulations reinforce the inhibitory effect of CEO equity compensation on ESG greenwashing. Our results imply that different CEO compensation schemes can have opposite effects on limiting firms' ESG greenwashing behavior in the Chinese context. Furthermore, we highlight that the question of form over substance principle to certain external governance mechanisms, leading CEO to exacerbate impression management of ESG disclosure.

Environmental, social and governance (ESG) performance as a moderator in assessing the impact of government subsidies on underinvestment in China

In recent years, underinvestment has become common among subsidised enterprises in China. Stakeholder theory asserts that environmental, social and governance (ESG) performance forces enterprises to prioritise stakeholder needs by incorporating ESG principles into business operations, which in turn influences business investment decision-making. This study examines the impact of government subsidies on firm underinvestment and whether ESG performance plays a moderating role in this direct relationship. A dataset of 17,780 firm-year observations of A-share public firms in China for the period 2011-2021 was employed, and the data were analysed using the ordinary least squares regression model, fixed-effects regression model, propensity score matching difference-in-difference model, and instrumental variable approach. These results indicate that government subsidies mitigate firm underinvestment and tend to reduce underinvestment in firms with higher ESG performance. Moreover, the findings indicate that the performance in ESG factors influences the effect of government subsidies on the lack of investment in state-owned enterprises (SOEs), as opposed to non-SOEs. This effect is more noticeable in heavily polluting industries compared to non-heavily polluting industries. These findings imply that the government should promote the ESG performance of subsidised firms to enhance their overall corporate investment efficiency.

A study on the impact of ESG rating on green technology innovation in enterprises: An empirical study based on informal environmental governance

Improving corporate green technology innovation is a key link in achieving green transformation and development. Compared with formal environmental regulations that force companies to carry out green innovation passively, ESG ratings under soft environmental regulations can better stimulate the internal motivation of companies. This study uses the ESG ratings of listed companies published for the first time by SynTao Green Finance as an exogenous impact. Taking China's A-share listed companies from 2011 to 2022 as a research sample, the multi-period differences-in-differences model was used to empirically test the impact of ESG rating soft supervision on corporate green technology innovation. The results show that the impact of ESG rating events as a soft market regulation has a significant positive impact on the improvement of corporate green technology innovation. This conclusion still holds after a series of robustness tests. Meanwhile, enterprise digital transformation plays a positive regulatory role. The heterogeneity test shows that the green technology innovation of state-owned enterprises is more affected by ESG ratings. Mechanism research has found that ESG rating events promote corporate green technology innovation by easing corporate financing constraints and reducing managerial myopia. Further research found that under the influence of the external environment, intensified market competition and increased attention from the capital market are also conducive to the improvement of corporate green technology innovation. This study strengthens the corporate ESG concept under the guidance of green development and provides empirical evidence for promoting corporate green transformation.

Can energy internet improve corporate ESG performance? -- Evidence from Chinese high energy-consuming companies

Under the challenges of global crises such as climate warming, ESG performance, which represents sustainable development, has received widespread attention at home and abroad. Using the panel data from 2011 to 2020, comprising 726 high energy-consuming companies listed on the Shanghai and Shenzhen A-shares, this paper takes Energy Internet demonstration project in 2016 as a quasi-natural experiment and builds a difference-in-difference model to study its microscopic policy effects. The study found that, firstly, Energy Internet can markedly enhance ESG performance of high energy-consuming companies. Secondly, the mechanism test finds that Energy Internet can facilitate high energy-consuming enterprises to enhance their ESG performance through three mechanisms: increasing government subsidies for enterprises in energy conservation and environmental protection, absorbing talent employment and improving information environment within the enterprises. Finally, the heterogeneity analysis proves that Energy Internet's policy effects are more pronounced in regions with higher financial expenditures on local science undertakings and among state-owned enterprises. China ought to persist in advancing the development of Energy Internet and provide companies with adequate support on finance, talent and technology. Meanwhile, during the construction of Energy Internet, attention should be paid to adapting to local conditions and enterprises.

Do disclosure of ESG information policies inhibit the value of heavily polluting Enterprises?-Evidence from China

Green governance and high-quality green development are crucial to the growth of enterprises; therefore, this paper examines how environmental, social, and corporate governance (ESG) disclosure policies affect the value of heavily polluting companies. The study's data is from the new version of the Governance Guidelines for Public Companies promulgated by the China Securities Regulatory Commission in 2018. Thus, the data of China's public companies from 2011 to 2021 is used for the study's analysis. The methods applied for our estimation analysis are the differences-in-differences (DID) and the mediation effect model. The findings depict that ESG information disclosure policies can significantly inhibit the corporate value of heavily polluting enterprises (HPE). Enterprise technological innovation plays a mediating effect in this mechanism; that is, after introducing the policy, it effectively alleviates the information asymmetry and promotes enterprise technological innovation, but it also damages the enterprise value. Further analysis shows that the inhibition effect of ESG information disclosure policy on the value of HPE is heterogeneous, and for non-state-owned enterprises, ESG information disclosure policies have a stronger inhibitory effect. Also, there is little difference between the central and western regions and the eastern region in terms of the inhibitory effect of ESG disclosure policies on the value of HPE. The conclusion of this paper is conducive to improving the information disclosure policy of listed companies and promoting the green development of enterprises.

ESG ratings and trade credit: inverted U-shaped moderating role of information transparency and executives with overseas backgrounds

In the context of carbon peaking and carbon-neutral target, enterprises need to adjust their resource allocation and practice environmental, social, and governance (ESG) activities. Previous literature ignores the resources and costs that enterprises may consume to improve ESG ratings, leading to an unclear relationship between ESG ratings and trade credit. We investigate how ESG ratings affect trade credit using the inverted U-shaped (U-shaped) moderating effect regression model. The result shows that ESG ratings have an inverted U-shaped relationship with trade credit. Information transparency moderates the curvilinear relationship between ESG ratings and trade credit, with higher information transparency flattening the shape of the inverted U-shaped curve and moving the inflection point to the left. Executives with overseas backgrounds significantly moderate the inverted U-shaped relationship between ESG ratings and trade credit. Executives with overseas backgrounds flatten the inverted U-shaped relationship, and the inflection point shifts to the right. Overall, our findings show that higher ESG ratings do not help enterprises to expand trade credit in emerging market countries. Higher ESG ratings consume more corporate resources and are more likely to become a tool for management self-interest.