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ESG and Corporate Financial Performance: Empirical Evidence from China’s Listed Power Generation Companies

Changhong Zhao (), Yu Guo (), Jiahai Yuan (), Mengya Wu (), Daiyu Li (), Yiou Zhou () and Jiangang Kang ()
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Changhong Zhao: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Yu Guo: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Jiahai Yuan: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Mengya Wu: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Daiyu Li: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Yiou Zhou: School of Foreign Languages, North China Electric Power University, Beijing 102206, China
Jiangang Kang: School of Foreign Languages, North China Electric Power University, Beijing 102206, China

Sustainability, 2018, vol. 10, issue 8, 1-18

Abstract: Nowadays, listed companies around the world are shifting from short-term goals of maximizing profits to long-term sustainable environmental, social, and governance (ESG) goals. People have come to realize that ESG has become an important source of the corporate risk and may affect the company’s financial performance and profitability. Recent research shows that good ESG performance could improve the financial performance in some countries. Yet, the question of “how does ESG affect financial performance” has not been thoroughly discussed and studied in China. In this article, we study China’s listed power generation groups to explore the relationship between ESG performance and financial indicators in the energy power market based on the panel regression model. The results show that good ESG performance can indeed improve financial performance, which has significant meanings for investors, company management, decisionmakers, and industry regulators.

Keywords: ESG; financial indicators; panel regression model; power generation; China (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2018
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