How does ESG performance affect stock returns? Empirical evidence from listed companies in China
With the increasing attention to sustainable development, environmental, social, and corporate governance (ESG) investment has become an important vehicle for achieving carbon neutrality worldwide. In this paper, the impact of ESG performance on stock returns and the transmission mechanism are explo...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2023-05-01
|
| Series: | Heliyon |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2405844023035272 |
| _version_ | 1827937288280080384 |
|---|---|
| author | Xiao-Na Yin Jing-Ping Li Chi-Wei Su |
| author_facet | Xiao-Na Yin Jing-Ping Li Chi-Wei Su |
| author_sort | Xiao-Na Yin |
| collection | DOAJ |
| description | With the increasing attention to sustainable development, environmental, social, and corporate governance (ESG) investment has become an important vehicle for achieving carbon neutrality worldwide. In this paper, the impact of ESG performance on stock returns and the transmission mechanism are explored. A fixed effect model based on a panel unbalanced data of listed companies in China from 2011 to 2020 is selected for the empirical analysis. The results show that ESG performance of listed companies in China positively impacts stock returns. However, by distinguishing the ownership nature and region to which listed companies belong, this study finds that the relationship between ESG performance and stock returns is particularly significant for non-state-owned companies and those in the eastern region. Further, based on stakeholder theory, financial performance and corporate innovation ability are embedded into the relationship between ESG performance and stock returns. Both financial performance and corporate innovation ability play partial mediating roles in the correlation between ESG performance and stock returns. In addition, the relationship between ESG performance and corporate innovation ability is non-linear. This paper provides insight for emerging markets into cultivating the value investment concept of investors and improving the ESG information disclosure system. |
| first_indexed | 2024-03-13T08:23:22Z |
| format | Article |
| id | doaj.art-0a7eda3b6e0540cdbde095aeae00a787 |
| institution | Directory Open Access Journal |
| issn | 2405-8440 |
| language | English |
| last_indexed | 2024-03-13T08:23:22Z |
| publishDate | 2023-05-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Heliyon |
| spelling | doaj.art-0a7eda3b6e0540cdbde095aeae00a7872023-05-31T04:47:12ZengElsevierHeliyon2405-84402023-05-0195e16320How does ESG performance affect stock returns? Empirical evidence from listed companies in ChinaXiao-Na Yin0Jing-Ping Li1Chi-Wei Su2School of Finance, Shanxi University of Finance and Economics, Taiyuan, Shanxi, China; Corresponding author. School of Finance, Shanxi University of Finance and Economics, Taiyuan, Shanxi, China.School of Finance, Shanxi University of Finance and Economics, Taiyuan, Shanxi, ChinaSchool of Economics, Qingdao University, Qingdao, Shandong, ChinaWith the increasing attention to sustainable development, environmental, social, and corporate governance (ESG) investment has become an important vehicle for achieving carbon neutrality worldwide. In this paper, the impact of ESG performance on stock returns and the transmission mechanism are explored. A fixed effect model based on a panel unbalanced data of listed companies in China from 2011 to 2020 is selected for the empirical analysis. The results show that ESG performance of listed companies in China positively impacts stock returns. However, by distinguishing the ownership nature and region to which listed companies belong, this study finds that the relationship between ESG performance and stock returns is particularly significant for non-state-owned companies and those in the eastern region. Further, based on stakeholder theory, financial performance and corporate innovation ability are embedded into the relationship between ESG performance and stock returns. Both financial performance and corporate innovation ability play partial mediating roles in the correlation between ESG performance and stock returns. In addition, the relationship between ESG performance and corporate innovation ability is non-linear. This paper provides insight for emerging markets into cultivating the value investment concept of investors and improving the ESG information disclosure system.http://www.sciencedirect.com/science/article/pii/S2405844023035272ESG Performance 1Stock returns 2Financial performance 3Corporate innovation capability 4 |
| spellingShingle | Xiao-Na Yin Jing-Ping Li Chi-Wei Su How does ESG performance affect stock returns? Empirical evidence from listed companies in China Heliyon ESG Performance 1 Stock returns 2 Financial performance 3 Corporate innovation capability 4 |
| title | How does ESG performance affect stock returns? Empirical evidence from listed companies in China |
| title_full | How does ESG performance affect stock returns? Empirical evidence from listed companies in China |
| title_fullStr | How does ESG performance affect stock returns? Empirical evidence from listed companies in China |
| title_full_unstemmed | How does ESG performance affect stock returns? Empirical evidence from listed companies in China |
| title_short | How does ESG performance affect stock returns? Empirical evidence from listed companies in China |
| title_sort | how does esg performance affect stock returns empirical evidence from listed companies in china |
| topic | ESG Performance 1 Stock returns 2 Financial performance 3 Corporate innovation capability 4 |
| url | http://www.sciencedirect.com/science/article/pii/S2405844023035272 |
| work_keys_str_mv | AT xiaonayin howdoesesgperformanceaffectstockreturnsempiricalevidencefromlistedcompaniesinchina AT jingpingli howdoesesgperformanceaffectstockreturnsempiricalevidencefromlistedcompaniesinchina AT chiweisu howdoesesgperformanceaffectstockreturnsempiricalevidencefromlistedcompaniesinchina |