The Interaction Effect between ESG and Green Innovation and Its Impact on Firm Value from the Perspective of Information Disclosure

Abstract

Few studies have been conducted on whether the coexistence of green innovation and corporate social responsibility (CSR) has a favorable interaction effect on firm value. This interaction effect is of great significance for enterprises balancing resource allocation between two factors in the future. Meanwhile, information disclosure can reflect the efforts of enterprises in taking on CSR. Therefore, taking China's listed companies as an example, this paper studies the interaction effect of CSR after being divided into the three different dimensions of environment, society, and governance (ESG) and green innovation on firm value. The quantile regression method can reflect the impact of CSR and green innovation on the firm value of different levels. The study finds that:(1) green innovation can promote the improvement of medium-and high-level firm value; (2) only the disclosure of environmental and social information can have a positive impact on firm value; (3) the interaction effect between green innovation and social disclosure on firm value is a substitution effect, which will gradually weaken with the increase of firm value. This paper proposes that relevant departments should guide green funds into enterprises with capital constraints to alleviate the issue of fund crowding into CSR and green innovation.

The Influence of Environmental, Social and Governance Reporting on Firm Value: Malaysian Evidence

“…This result is supported with Atan, Alam, Said, and Zamri (2018), Tarmuji, Maelah andTarmuji (2016), andMiralles-Quirós et al (2018) whereby it is found that social practices were negative. However, this result differs with Setyahuni and Handayani (2020), Zhang, Qin, and Liu (2020), Qiu, Shaukat and Tharyan (2016), Brogi and Lagasio (2019), Yoon, Lee and Byun et al (2018) and Qureshi, Kirkerud, Theresa, and Ahsan (2020) studies whereby it is found that social practices were positive and significant on firm value.…”

“…This result is supported with Setyahuni and Handayani (2020); Qureshi, Kirkerud, Theresa and Ahsan (2020); Irawan et al (2021); Brogi and Lagasio (2019); Yoon, Lee, and Byun et al (2018), Atan et al (2018), andMiralles-Quirós et al (2018) studies whereby it is found that environmental practices were positive and significant on firm value. However, this result also differs with Tarmuji, Maelah, and Tarmuji, (2016); Zhang, Qin, and Liu (2020); Qiu, Shaukat, and Tharyan (2016) studies whereby it is found that environmental practices are not significant on firm value.…”

“…The concept of firm value states that any business operation that increases shareholder interest will increase the company's valuation. Tobin's Q is a metric for estimating the firm value of a company (Yu, Guo & Luu, 2018;Atan, Alam, Said & Zamri, 2018;Zhang, Qin & Liu (2020); Aouadi & Marsat, 2018). A value of less than one indicates that the organisation's resources are being misused, and it is generating less market capital than its asset.…”

R&D investment, ESG performance and green innovation performance: evidence from China

“…Control variables. Guided by Garcia et al (2017), Landi and Sciarelli (2019), Miralles-Quirós et al (2019), Paltrinieri et al (2020), Sun et al (2019) and Zhang et al (2020), ROA, firm size (SIZE), debt ratio (LEV) and firm age (AGE) are chosen as control variables. In addition, industry dummy (INDUSTRY), region dummy (REGION) and year dummy (YEAR) is also introduced in the regression model.…”

“…The relationship between CSR and firm performance is mixed in academics. Most studies (Buallay, 2019; Chelawat and Trivedi, 2016; Cho and Lee, 2019; Di Tommaso and Thornton, 2020; Filbeck et al , 2019; Jackson and Hua, 2009; McGuire et al , 1988; Miroshnychenko et al , 2017; Orlitzky et al , 2003; Rodríguez-Fernández et al , 2019; Schuler and Cording, 2006; Weber, 2014; Yoon et al , 2018; Zhang et al , 2020; Zhao et al , 2018) found superior financial performance from CSR-related investments. For example, Chelawat and Trivedi (2016) confirmed that good corporate ESG generates enhanced financial performance for companies in the context of India.…”