The effect of financial marketization on the nexus between ESG rating uncertainty and corporate innovation

Deng-Kui Si, Fu-You Zhou, Xiao-Lin Li and Dongmin Kong

International Review of Financial Analysis, 2025, vol. 106, issue C

Abstract: This paper investigates the impact of financial marketization on the relationship between ESG rating uncertainty and corporate innovation using non-financial listed firms from 2009 to 2023 in China. We find that ESG uncertainty decreases corporate innovation, and the financial marketization characterized by interest rate marketization weakens the negative impact. The above effects are more pronounced for firms with higher financing constraints, higher institutional quality, and capital-intensive industries. We demonstrate that improving credit screening ability, investor anchoring effect, and corporate governance efficiency are three essential channels through which financial marketization restrains the impact of ESG rating uncertainty on corporate innovation.

Keywords: ESG rating uncertainty; Financial marketization; Corporate innovation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005708

DOI: 10.1016/j.irfa.2025.104483

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