Corporate ESG performance and manager misconduct: Evidence from China

The Environmental, social, and governance (ESG) disclosure is an important aspect of firms’ strategies. Therefore, exploring how to facilitate the firms’ ESG disclosure is necessary. This paper examines the role of multiple large shareholders (MLS, hereafter) in facilitating a firm’s ESG disclosure. Using a sample of Chinese listed firms during 2011–2020, we compare the ESG disclosure of firms having MLS with that of firms having a single large shareholder (SLS, hereafter) and find that having MLS associated with significantly higher ESG disclosure. After addressing endogeneity and altering the measurement of MLS, the benchmark results still hold after. Additional analysis shows that MLS exerts a more prominent positive effect on ESG disclosure in SOEs. We also examine the role of the other large shareholders in facilitating firms’ ESG disclosure. Our findings reveal a bright side of MLS: it facilitates ESG disclosure by monitoring. Therefore, this paper’s conclusion sheds new light on the bright side of MLS from the perspective of firms’ ESG disclosure and provides insights into how to improve ESG disclosure.

Section: Summary Statisticssupporting

confidence: 74%

Section: Theoretical Analysis and Hypothesis Developmentmentioning

confidence: 99%

ESG disclosure facilitator: How do the multiple large shareholders affect firms’ ESG disclosure? evidence from China

Wang

Fan

Zhuang

2023

“…The selection of the intensity of Confucian culture in the region where the firm is located as an instrumental variable meets the requirement of being correlated with endogenous variables and independent of the dependent variable. Since the academy is an important place for spreading Confucianism and since the Tang Dynasty, all state and county schools have set up Confucian temples, so to better address the endogeneity issue, we followed He et al (2022) to use the number of Confucian temples within a 50 km radius of the firm's location to measure the intensity of Confucian culture and use it as an instrumental variable for the firm's ESG performance (ESG_IV) in a two-stage least squares regression, the results of which are shown in columns ( 1) and ( 2) of Table 6. Column (1) shows the regression results for the first stage, where the coefficients of the instrumental variable (ESG_IV) and ESG performance are significantly positive at the 1% level, indicating that the intensity of Confucian culture in the region is significantly and positively related to firms ESG performance.…”

Section: Instrumental Variables Methodsmentioning

confidence: 99%

“…Good ESG performance can improve information transparency, alleviate information asymmetry, reduce agency conflicts, and thus reduce the costs of equity (El et al, 2011) and debt (Goss and Roberts, 2011). In addition, ESG can restrain manager misconduct (He et al, 2022), reduce systemic and special risks (Cerqueti et al, 2021), and play a positive role in corporate governance and risk management. More importantly, most studies find that ESG can significantly improve enterprise performance and long-term value (Friede et al, 2015;Li et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

Does ESG performance promote vitality of capital market? Analysis from the perspective of stock liquidity

Chen

Liu

Jiang

et al. 2023

Environmental, Social, and Governance (ESG) is changing from a concept to corporate soft power. Can this improve corporate performance in capital markets? There is little literature linking environmental, Social, and Governance performance to stock liquidity. Therefore, It is of urgent theoretical and practical importance to study the impact of environmental, Social, and Governance performance on stock liquidity. Using Chinese A-share listed companies from 2015 to 2020 as a sample to empirically examine the impact of environmental, Social, and Governance performance on stock liquidity and its mechanism. We find that environmental, Social, and Governance performance has a significant positive impact on listed companie’s stock liquidity. This conclusion was validated after conducting a series of robustness tests. Mechanism analysis shows that environmental, Social, and Governance performance can promote stock liquidity by reducing agency costs, increasing the proportion of foreign ownership, and improving corporate reputation. The heterogeneity analysis shows that environmental, Social, and Governance performance in state-owned enterprises, heavily polluting enterprises, and enterprises in areas with low degrees of marketisation has a more significant positive promoting effect on stock liquidity. This study expands the research on environmental, Social, and Governance performance and has implications for promoting the development of environmental, Social, and Governance practices.

“…With the definition of the new development concept and the goal of high-quality economic development, the theme of "low carbon" is gradually concerned by more and more scholars, and the research direction and content are increasingly extensive. He et al (2022a) based on the micro perspective, focused on the ESG performance of enterprises and its impact on enterprise investment risk and manager misconduct while fulfilling environmental responsibilities, and studied the regulatory effect of economic policy uncertainty and corporate social responsibility on Enterprise Green Innovation (He et al, 2020;He et al, 2022b;He et al, 2022c). Ren et al (2022a) assessed the impact of climate risk on carbon emissions, focusing on the environmental performance of enterprises, and believed that climate risk would promote the carbon emissions of enterprises.…”

Section: Literature Reviewmentioning

confidence: 99%

Tax Policies of Low Carbon in China: Effectiveness Evaluation, System Design and Prospects

Feng¹,

et al. 2022

Fiscal and taxation policy tools play an important role in promoting green and low-carbon development. Based on classical tax theory, including the Potter hypothesis and the environmental Kuznets curve, this paper explores the impact of environmental tax regulation on economic growth and carbon emission reduction. We find that resource tax reform could promote green total factor productivity; however, the ad valorem reform of resource tax does not significantly raise the level of low carbon development. This effect varies among different regions as well as different tax cuts and fee reductions. Fiscal revenue decentralization has a reverse adjustment effect on the impact of resource taxes on green total factor productivity. We conclude that it is necessary to deepen the reform of the fiscal and taxation system to achieve the carbon neutrality and emission peak goal.