ESG rating, board faultlines, and corporate performance

Xinru Ji, Xiaoxu Chen and Zhiming Ao

Research in International Business and Finance, 2024, vol. 72, issue PB

Abstract: This study integrates ESG rating, board faultlines, and corporate performance within a comprehensive framework using data from Chinese listed companies spanning the years 2009–2021. Our objective is to investigate the influence of ESG performance on corporate performance and the moderating role of board faultlines. The empirical findings indicate that favorable ESG performance has a positive impact on corporate performance, while board faultlines attenuate the positive relationship between ESG rating and corporate performance. The effect is more pronounced for deep faultlines compared to surface faultlines. Furthermore, our analysis reveals that favorable ESG performance enhances corporate performance by reducing corporate debt financing costs and improving information disclosure quality. Stronger board faultlines hinder the positive benefits of ESG performance. Notably, these relationships among ESG rating, board faultlines, and corporate performance are more significant in non-state-owned enterprises than in state-owned enterprises.

Keywords: ESG rating; Board faultlines; Corporate performance; Information disclosure (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:72:y:2024:i:pb:s0275531924003234

DOI: 10.1016/j.ribaf.2024.102530

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