Research On The Impact Of ESG Performance On Corporate Inefficient Investment

In September 2018,the China Securities Regulatory Commission revised the Code of Governance for Listed Companies,which proposed to actively learn from and learn from advanced foreign management concepts and establish a complete ESG(Environment,Social Responsibility,Corporate Governance)information disclosure system.Research and practice at home and abroad show that ESG is closely related to the inefficient investment of enterprises,and how to improve the inefficient investment of enterprises is the most concerned issue of enterprises today.China’s research on ESG is still in its infancy,and its impact on A-share listed companies has not been fully studied and empirical,so exploring the relationship between ESG performance and inefficient investment level has important reference significance for listed companies to make relevant decisions.This paper takes the listed companies that issued ESG ratings in the A-share market from 2011 to 2020 as the research object,uses the Richardson inefficient investment model to measure the inefficient investment level of the enterprises,and classifies according to the positive and negative residual values of the regression model,with positive residual values indicating that the company has overinvestment problems,and negative residual values indicating that the enterprises have underinvestment problems.Firstly,this paper studies the impact of corporate ESG performance on corporate overinvestment and underinvestment,and explores whether corporate ESG performance has an improvement effect on both situations of inefficient investment.Secondly,the path mechanism of ESG affecting enterprises’ inefficient investment is explored.Then,the intersection of corporate ESG performance and corporate performance,corporate ESG performance and corporate debt financing cost was added to explore the moderating role of corporate performance and corporate debt financing cost in the impact of corporate ESG performance on corporate inefficient investment.Then,group regression is carried out from the perspectives of enterprise life cycle,digital finance development degree and marketization degree to explore the impact of corporate ESG performance on corporate inefficient investment under different conditions.Finally,this paper tests the robustness of the explanatory variables and the explanatory variables,and adopts the instrumental variable method to eliminate the possible endogenous problems in the empirical evidence.The empirical results of this paper find that:(1)corporate ESG performance is significantly negatively correlated with corporate underinvestment,and although negatively correlated with corporate overinvestment,it is not significant,and this paper argues that corporate ESG performance mainly reduces the level of inefficient investment by alleviating enterprises’ underinvestment;(2)As an information disclosure,corporate ESG performance can produce good information effects,effectively alleviate the information asymmetry between enterprises and external investors,and help capital and other resources flow into enterprises;It can also alleviate the information asymmetry between enterprise managers and shareholders,and then alleviate the agency problem to a certain extent,which helps enterprise managers make correct decisions in line with the long-term development of enterprises,which can effectively alleviate the underinvestment of enterprises;(3)For enterprises with high corporate performance,the mitigating effect of corporate ESG performance on corporate underinvestment is more obvious;Similarly,in enterprises with higher debt financing costs,the effect of corporate ESG performance will be more effective,and the mitigation effect on corporate underinvestment will be more obvious.(4)Enterprises in the growth stage,enterprises in regions with a higher degree of digital financial development,and enterprises in regions with a higher degree of marketization are more conducive to the alleviating role of corporate ESG performance in mitigating corporate underinvestment.Based on the above conclusions,this paper believes that enterprises should attach importance to ESG-related construction,improve their ESG performance,assume social responsibility,and enhance the sustainability of corporate development.Employees should improve their understanding of ESG concepts,build a "common interest" for personal and enterprise development,and realize the long-term development of individuals and enterprises;Investors should pay more attention to corporate ESG performance rather than just short-term profits,so as to promote sustainable social development;Regulators should continuously improve the institutional construction related to ESG system and ESG construction,so as to promote enterprises to make correct ESG decisions,so as to improve the overall operational efficiency of enterprises.The innovation of this paper is reflected in two aspects: first,the selection of Chinese A-share listed companies as a sample,the empirical results are more in line with national conditions,reflecting the development status and influence of ESG in China.Second,this paper finds that the ESG performance of enterprises mainly affects the underinvestment of enterprises,which provides new ideas for future related research.The disadvantage is that the sample data span is 10 years,which may not reflect the long-term effect of ESG,which may be one of the reasons why the ESG performance of enterprises and the overinvestment coefficient of enterprises are not significant;The estimation of some variables has certain limitations.