ESG Rating Divergence and Exploratory Green Innovation for heavy-polluting Firms

Xiaonan Guo () and Jiaxuan Ou ()
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Xiaonan Guo: Wuhan University of Technology
Jiaxuan Ou: North China Electric Power University

A chapter in Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), 2025, pp 223-231 from Springer

Abstract: Abstract This paper examines the relationship between ESG rating divergence and firms’ green innovation using a sample of Chinese firms in the heavy-polluting firms from 2009 to 2022. It is found that ESG rating divergence significantly inhibits the level of exploratory green innovation of heavy-polluting firms. Mechanism analysis finds that increasing the cost of corporate debt financing and decreasing corporate risk-taking are two ways ESG rating divergence inhibits firms’ exploratory green innovation. Heterogeneity analysis finds that the inhibitory effect of ESG rating divergence on firms’ exploratory green innovation is more pronounced among firms with high public concern, while there is no significant difference among firms with different levels of internal control.

Keywords: ESG rating divergence; heavy-polluting firms; exploratory green innovation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-702-1_24

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DOI: 10.2991/978-94-6463-702-1_24

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