Corporate ESG performance and bankruptcy risk

Hong Lin, Xinyu Gu and Xianjun Bao

Finance Research Letters, 2025, vol. 76, issue C

Abstract: China's sustainable development push has increased corporate attention on environmental, social, and governance (ESG) performance. Although studies have examined the ESG impacts on stock volatility, credit risk, and default risk, limited studies have examined its relationship with bankruptcy risk. Using data from A-share listed companies in China from 2011 to 2020, we examine this relationship through signaling and legitimacy theories. Findings show a negative correlation between bankruptcy risk and ESG performance, moderated by green credit policy, finance development, and technology innovation. These findings are vital for facilitating low-carbon transition and high-quality development.

Keywords: ESG performance; Bankruptcy risk; Green credit policy; Green finance development (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s154461232500251x

DOI: 10.1016/j.frl.2025.106987

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