Does ESG Performance Affect Firm Value? Evidence from a New ESG-Scoring Approach for Chinese Enterprises

Xiaoling Yu () and Kaitian Xiao
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Xiaoling Yu: Business School, Foshan University, Foshan 528000, China
Kaitian Xiao: School of Law, Shanghai Maritime University, Shanghai 200120, China

Sustainability, 2022, vol. 14, issue 24, 1-40

Abstract: Proposing a new scoring method to evaluate the environmental, social, and corporate governance (ESG) performance of Chinese A-share listed companies over the period 2010–2019, this study investigates the impact of ESG on firm value, by taking Tobin’s Q, Return on Assets (ROA) and Market-to-Book ratio (MB) as proxy variables for firm value. We find a significantly positive relationship between ESG composite performance and firm value, which supports the stakeholder theory. This result can hold when we carry out robustness checks, i.e., changing dependent variable, instrument variable (IV) regression, and Heckman’s two-stage estimation. When an existing social responsibility rating (Hexun’s CSR scores) is taken as the proxy of ESG performance, the main conclusion also keeps in line. For the three sub-dimensions, the positive impact of environmental (E) and social (S) performance on firm value can hold, while that of corporate governance (G) cannot pass all the robustness tests. In terms of heterogeneity, there is evidence that the enhancement effect of ESG on firm value for state-owned companies is stronger than that for non-state-owned companies. Besides, the enhancement effect is significant for the non-key pollution-monitored firms but insignificant for the key pollution-monitored firms.

Keywords: ESG performance; ESG quantitative scoring; firm value; stakeholder theory; Chinese enterprises (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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