ESG Performance, Investor Confidence, and Foreign Direct Investment: Evidence from Listed Companies in China

Xin Guan, Xinyue Wu and Wenli Zheng

Emerging Markets Finance and Trade, 2025, vol. 61, issue 11, 3406-3422

Abstract: This study examined the data of Chinese A-share listed companies from 2013 to 2022 to investigate the relationship between corporate environmental, social, and governance (ESG) performance and foreign direct investment (FDI). Unlike previous studies, this study explored the mechanism between ESG performance and FDI from the perspective of investor confidence. We found that ESG performance promotes FDI and drives foreign investment into the Chinese market by boosting investor confidence. Notably, the impact was more pronounced in high-tech and manufacturing sectors. The results suggest that as global investors become more concerned about ESG, companies should focus on improving ESG performance to enhance investor confidence. This will help companies attract foreign investment while gaining competitive market advantages.

Date: 2025
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DOI: 10.1080/1540496X.2025.2481177

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