Government Environmental Regulation and Corporate ESG Performance: Evidence from Natural Resource Accountability Audits in China

Yingzheng Yan, Qiuwang Cheng, Menglan Huang, Qiaohua Lin and Wenhe Lin ()
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Yingzheng Yan: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Qiuwang Cheng: School of Economics and Business Administration, Postdoctoral Research Center of Business Administration, Chongqing University, Chongqing 400044, China
Menglan Huang: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Qiaohua Lin: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Wenhe Lin: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China

IJERPH, 2022, vol. 20, issue 1, 1-16

Abstract: With the increasing global concern for the ecological environment and sustainable development, all countries have proposed environmental regulatory policies to improve the quality of their ecological environments. China has also proposed an environmental regulation policy: Leading an officials’ accountability audit of natural resources (AANR). As the main subject of consuming resources, the sustainability of enterprises has become a focus of all parties. The Environmental, Social, and Governance (ESG) metric measures corporate sustainability. As a result, companies’ ESG performance has gained the community’s attention. Based on data from Chinese A-share listed companies in Shanghai and Shenzhen from 2011 to 2019, this study investigates the role of AANR on the ESG performance of companies via the difference-in-differences (DID) method. This study found that implementing the AANR pilot significantly negatively impacted corporate ESG performance. This result was found to remain robust after passing parallel trend and robustness tests. Further research found that the AANR differed significantly across corporate ownership and regions in corporate ESG performance. First, pilot implementation had a more significant impact on the ESG performance of non-state enterprises. Second, the differences across regions showed that the central region had the most significant impact, followed by the western region, while the eastern region had the most negligible impact. This study will help government departments improve the AANR system and enable companies to focus on their ESG performance.

Keywords: environmental regulation; ESG indices; sustainable development; government audit (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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