Effects of equity incentives on corporate ESG performance–Multiperiod difference-in-differences method

Hang Wang and Haiying Liu

Finance Research Letters, 2025, vol. 79, issue C

Abstract: This study evaluates the impact of corporate equity incentives on ESG performance using a difference-in-differences model with multiple time points, based on data from A-share listed companies spanning 2007–2022. The study finds that applying equity incentives improves enterprise ESG performance, primarily by improving corporate governance. Mechanism analyses show that equity incentives affect ESG performance by lowering agency costs and increasing research and development investment. This study demonstrates how equity incentive systems can help managers focus on ESG performance. It demonstrates the positive effects of market changes, which are critical to increasing corporate sustainability.

Keywords: Equity incentives; ESG; Multiperiod DID method (search for similar items in EconPapers)
JEL-codes: C23 G34 M14 M52 O31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325004544

DOI: 10.1016/j.frl.2025.107191

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