Research On The Influence Of Enterprises’ ESG Performance On Financial Performance

With the proposal of "carbon peak" and "carbon neutralization" goal and continuous progress of green construction,ESG investment concept provides a new idea and possibility for sustainable development of enterprises.At the same time,negative events such as financial fraud and environmental pollution of listed enterprises occur frequently,so the stakeholders pay more attention to non-financial performance,and ESG related indicators become an important reference for decision-making.At present,our ESG practice is still in the preliminary stage of development.As the key body of capital market,Chinese enterprises still exist problems such as insufficient understanding of ESG concept,lack of practice,and one-sided pursuit of economic benefit ignoring social benefit.Therefore,exploring the relationship between ESG performance and financial performance is helpful for enterprises to deepen their understanding of ESG practice,handle the relationship with stakeholders,and better balance economic and social benefits.And provide evidence for the practical practice of relevant economic subjects.This paper reviews the relevant literature on ESG,financial performance,and the relationship between corporate ESG performance and financial performance,constructs a theoretical analysis framework of ESG performance and financial performance based on stakeholder theory,sustainability theory,signaling theory,and legitimacy theory,introduces corporate reputation as a factor,clarifies the intrinsic channels through which corporate ESG performance has an impact on financial performance,and further The paper further explores the moderating effect of public pressure from different sources on the relationship between ESG performance and financial performance,based on which the five research hypotheses of this paper are proposed.Further,this paper selects A-share listed companies in Shanghai and Shenzhen from 2009 to 2020,measures the ESG performance of enterprises by the ESG ratings published by Wind,and measures the financial performance by the return on assets(ROA),constructs a fixed-effect model,and uses multiple regression analysis to empirically test the proposed hypotheses.The results show that:(1)Corporate ESG performance has a significant positive effect on financial performance,i.e.,good corporate ESG performance has an enhancing effect on corporate financial performance.(2)The mechanism test finds that corporate reputation is an inherent channel through which corporate ESG performance enhances financial performance.(3)Different sources of public pressure: government regulation,industry competition and public opinion monitoring all play a positive moderating role in the relationship between corporate ESG performance and financial performance.(4)The heterogeneity test finds that the improvement of corporate ESG performance on financial performance is more pronounced for non-state owned,high quality information disclosure and smaller firms.Finally,suggestions are given based on the research findings,which are of reference significance for enterprises to deepen ESG practices and achieve sustainable development,and for governments to improve relevant policies,grasp regulatory efforts,and promote the process of green development.