 ESG rating uncertainty and corporate financial misconductJian Zhou and Xiaodong Lei Journal of Business Research, 2025, vol. 189, issue C Abstract: Drawing on the fraud triangle theory, we examine the impact of environmental, social, and governance (ESG) rating uncertainty on corporate financial misconduct. Using a dataset of Chinese listed companies, we find a positive relationship between ESG rating uncertainty and corporate financial misconduct. The mediation analysis results suggest that this relationship can be explained by increased financial constraints and reduced institutional investor monitoring. Furthermore, we find that the positive relationship between ESG rating uncertainty and corporate financial misconduct is more pronounced in heavily polluting industries and those facing intense competition, whereas board governance, the legal system, and Confucian culture help weaken this positive relationship. Overall, our study provides new evidence that ESG rating uncertainty leads to more corporate financial misconduct, thereby emphasizing the significance of being vigilant to the dark side of divergent ESG ratings in capital market regulation. Keywords: ESG rating; ESG rating uncertainty; Corporate financial misconduct; Corporate governance; Capital market regulation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:189:y:2025:i:c:s0148296324005964 DOI: 10.1016/j.jbusres.2024.115092 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.