Corporate ESG performance and stock pricing efficiency

Shaowei Chen and Zhiliang Wu

The North American Journal of Economics and Finance, 2025, vol. 79, issue C

Abstract: This study investigates the impact of environmental, social, and governance (ESG) performance on stock pricing efficiency in China, using panel data on Chinese listed A-share firms from 2013 to 2022. We find that corporate ESG performance significantly improves stock pricing efficiency. This conclusion remains unchanged after a series of robustness tests. Heterogeneity analysis reveals that a smaller firm size, lower institutional investor shareholding, and lower audit fees lead to a stronger effect of ESG performance on stock pricing efficiency. Moreover, mechanism tests suggest that ESG performance can improve stock pricing efficiency by calming investor sentiment and mitigating information asymmetry problems.

Keywords: ESG performance; Stock pricing efficiency; Investor sentiment; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G10 G14 G41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:79:y:2025:i:c:s1062940825000804

DOI: 10.1016/j.najef.2025.102440

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