Can companies’ participation in ESG ratings improve green innovation efficiency? Evidence from Chinese A-share listed companies

Ling Shen, Xiaozhong Yang and Guangcheng Ma

Finance Research Letters, 2025, vol. 78, issue C

Abstract: This study uses data from Chinese A-share listed companies from 2001 to 2023. It constructs a dynamic network data envelopment analysis (DNDEA) model and a DID model to empirically study the relationship between corporate participation in ESG ratings and their green innovation efficiency (GIE). The study found that corporate participation in ESG ratings can significantly stimulate the improvement of GIE, and this finding remains valid after robustness tests. Mechanism analysis shows that ESG ratings can promote GIE by attracting investor attention and easing financing constraints and agency costs. Finally, heterogeneity analysis shows that the incentive effect of participating in ESG ratings is more significant for private companies, large companies, and companies in regions with a high degree of marketization.

Keywords: ESG rating; Green innovation efficiency; DNDEA model; DID model (search for similar items in EconPapers)
JEL-codes: Q10 Q54 Q55 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325003393

DOI: 10.1016/j.frl.2025.107075

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