ESG performance, managerial ability and corporate investment efficiency

Fang-Ju Liu

Finance Research Letters, 2025, vol. 80, issue C

Abstract: This paper selects A-share listed companies in China from 2017 to 2023 as the research sample to explore the relationship between corporate ESG performance and investment efficiency. Through empirical testing using a two-way fixed effects model, it is found that improvements in ESG ratings can significantly inhibit corporate inefficient investment behaviors, including underinvestment and overinvestment. Further analysis reveals that managerial capability plays a mediating role in the relationship between ESG performance and investment efficiency. Superior ESG performance enhances managerial capability, which in turn promotes investment efficiency. Heterogeneity analysis shows that the positive effect of ESG performance on investment efficiency is more pronounced in non-state-owned enterprises.

Keywords: ESG performance; Managerial capability; Investment efficiency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006762

DOI: 10.1016/j.frl.2025.107416

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