How financial derivatives affect energy firms' ESG

Mengxu Xiong, Chen Liu and Junyi Xiang

Energy Economics, 2024, vol. 140, issue C

Abstract: This paper investigates how the usage of financial derivatives affect energy firm's ESG. Using a sample of Chinese listed energy firms, we document a positive relation between the financial derivatives usage and corporate ESG performance, and the results remain robust under a series of robustness and endogeneity tests. Alleviated financial pressure, enhanced information efficiency and increased risk exposure are potential mechanisms through which financial derivative usage promotes ESG performance. Moreover, the influence of financial derivatives exhibits heterogeneity, and the improvement of corporate ESG performance is more pronounced for state-owned enterprises, large firms, firms receive more investor attention, and firms located in the eastern region in China. Our study may shed lights on the impact of financial derivatives usage on energy firm's sustainable development.

Keywords: Financial derivatives; ESG performance; Energy firms (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:140:y:2024:i:c:s0140988324007370

DOI: 10.1016/j.eneco.2024.108028

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