ESG rating and labor income share: Firm-level evidence

Shuai Zhao and Yan Chen

Finance Research Letters, 2024, vol. 63, issue C

Abstract: This study investigates the relationship between ESG (environmental, social, and governance) ratings and labor share at the firm level. Using data from Chinese A-share listed firms from 2011 to 2021, we find a significantly positive relationship between the two. Furthermore, we document that state-owned enterprises do not demonstrate a strong sense of political and social responsibility in their employee recruitment projects, while companies with high ESG ratings in East China could increase their labor share due to less stringent financial constraints. Finally, the employment-creation effect of ESG ratings is one of the important channels for improving labor share. Considering the increasing awareness of ESG concepts and the boom in ESG investing, our findings hold significant relevance for employees, directors, investors, and public policymakers.

Keywords: ESG rating; Labor share; Social responsibility; Financial constraints (search for similar items in EconPapers)
JEL-codes: D33 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s154461232400391x

DOI: 10.1016/j.frl.2024.105361

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