The impact of local debt management on corporate ESG Performance: A quasi-natural experiment based on the new budget law

Ming Wei and Xingui Xu

Finance Research Letters, 2025, vol. 74, issue C

Abstract: This study focuses on the impact of China's local debt management, following the implementation of the new Budget Law in 2015, on the Environmental, Social, and Governance (ESG) performance of A-share listed companies between 2010 and 2021. The research reveals that effective management of local government debt under the new Budget Law significantly enhances corporate ESG performance. Further mediation analysis shows that the enforcement of the new Budget Law reduces corporate financial expense ratios, thereby indirectly boosting ESG performance. Additionally, the new Budget Law has a more pronounced effect on improving the ESG performance of private enterprises, with limited impact on state-owned enterprises.

Keywords: New budget law; Debt management; ESG performance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017458

DOI: 10.1016/j.frl.2024.106716

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