An Empirical Study Of How Corporate Financial Performance And Analyst Concerns Affect ESG Performance

The idea of ESG was first introduced on a global scale in 2004,but it wasn’t until the revision of the Code on Governance of Listed Companies was published in September 2018 that the development of the ESG system in China gradually accelerated.Since then,research in related fields has gradually risen.Since then,the market has given corporate ESG performance increasing amounts of attention,but there is still a dearth of awareness about ESG performance and disagreement about which businesses have the best ESG performance.In order to build an ESG system and prevent blind investments in China,it is crucial to research the relationship between financial performance—one of the key indicators for evaluating businesses—and ESG performance—an essential external monitoring force in the growth of the capital market.In this study,the financial performance of companies is chosen through three dimensions with six indicators,and factor analysis is used to derive a composite indicator to measure financial performance.The ESG rating data from WIND for 2018–2021 are chosen to measure the ESG performance of companies.First,examine the relationship between corporate financial performance and ESG performance of the current period,one-and two-period lags.Next,from the perspective of external supervision,we explore how analyst attention affects ESG performance in the current period,one-and two-period lags,and verify whether analyst attention does not have an intermediary variable that financial performance affects ESG performance.Finally,heterogeneity analysis and robustness test were carried out.This paper is found through empirical research :(1)Good corporate financial performance can significantly improve ESG performance in the current period,one-and two-period lags,,and this impact will become more obvious as time goes on.(2)Analyst attention has positive impact on ESG performance,and is an intermediate variable of financial performance affecting ESG performance.(3)Compared to state-owned companies,non-state-owned companies are more affected by financial performance on ESG performance.(4)Compared to other industries,heavy pollution industries have a smaller influence of financial performance on ESG performance.Based on the aforementioned findings,this paper contends that the ESG concept should be made more widely known,the ESG rating system should be improved,and enterprises should pay more attention to ESG;next,from the three ESG dimensions,enterprises should focus on long-term sustainable development and create a positive interaction between ESG and enterprise financial performance;and finally,investors need to understand the meaning of ESG performance and combine ESG performance with enterprise financial performance.In order to avoid developing blind ESG investment enthusiasm,investors need have a thorough understanding of what ESG success means and mix it with other company metrics.The following parts of this work primarily demonstrate its novelty.The research findings are more applicable to the domestic market because they first make use of aggregate ESG rating data from domestic ESG rating firms.Second,while taking into account the intermediary effect,this paper also includes the impact of analyst concern on ESG performance.Third,the empirical findings are stronger when the time lag impact is incorporated to account for the length of time required for ESG improvement.The conclusions of the study could change if the rating data were replaced or the time period was extended because China does not yet have a standardized rating standard and the rating agencies have a limited amount of time to cover a wide variety of domestic listed companies.