Can executive incentives improve corporate ESG performance? Evidence from Chinese listed companies

Ma Deshui, Wang Guohua, Ahsan Akbar (), Muhammad Usman and Marcela Sokolova
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Ma Deshui: Zhengzhou University of Aeronautics
Wang Guohua: Zhengzhou University of Aeronautics
Ahsan Akbar: Guangzhou City University of Technology, University of Hradec Kralove
Muhammad Usman: University of Education Lahore
Marcela Sokolova: University of Hradec Kralove

E&M Economics and Management, 2024, vol. 27, issue 4, 135-150

Abstract: This paper examined the driving factors of ESG performance in Chinese listed companies from the perspective of executive motivation and found that: (1) monetary compensation incentives and equity incentives exert a sizeable impact on enhancing corporate ESG performance, and the robustness test results remain unchanged; (2) corporate strategic change and green technology innovation play a mediating role in executive motivation and corporate ESG; (3) the promotion effect of executive monetary compensation incentives on ESG performance is more significant in state-owned enterprises and heavily polluting entities, while the impact of executives’ equity incentives on ESG performance is suppressed in state-owned enterprises; and (4) the economic effect test shows that good ESG performance has a positive economic influence of reducing a firms’ litigation risk and idiosyncratic risk. This paper provides empirical evidence for Chinese listed companies to improve ESG performance.

Keywords: Monetary compensation incentives; equity incentives; ESG; corporate strategic change; green technological innovation (search for similar items in EconPapers)
JEL-codes: G35 O32 O42 (search for similar items in EconPapers)
Date: 2024
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https://doi.org/10.15240/tul/001/2024-4-009

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Persistent link: https://EconPapers.repec.org/RePEc:bbl:journl:v:27:y:2024:i:4:p:135-150

DOI: 10.15240/tul/001/2024-4-009

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