ISSN: 2222-6990
Open access
ESG performance, or corporate environmental, social, and governance, has become a key indicator of a company's sustainability. This study employs a fixed-effect model to assess the nexus between ESG performance and corporate value using data from China's A-share listed companies between 2015 and 2022. The research results confirm that companies with superior ESG performance have better corporate value. Further mechanism test results show that green innovation partially mediates the relationship between company value and ESG performance. This conclusion still holds true in both robustness tests and Bootstrap tests. It shows that the execution of corporate ESG strategies is not only about improving green innovation capabilities but is also likely to directly promote the growth of corporate value by improving brand image, reducing capital costs, and enhancing market trust.
Aboud, A., & Diab, A. (2018). The impact of social, environmental and corporate governance disclosures on firm value: Evidence from Egypt. Journal of Accounting in Emerging Economies, 8(4), 442–458. https://doi.org/10.1108/JAEE-08-2017-0079
Altomonte, C., Gamba ,Simona, Mancusi ,Maria Luisa, & and Vezzulli, A. (2016). R&D investments, financing constraints, exporting and productivity. Economics of Innovation and New Technology, 25(3), 283–303. https://doi.org/10.1080/10438599.2015.1076203
Atan, R., Alam, Md. M., Said, J., & Zamri, M. (2018). The impacts of environmental, social, and governance factors on firm performance: Panel study of Malaysian companies. Management of Environmental Quality: An International Journal, 29(2), 182–194. https://doi.org/10.1108/MEQ-03-2017-0033
Beamish, P. W., & Chakravarty, D. (2021). Using the Resource-Based View in Multinational Enterprise Research. Journal of Management, 47(7), 1861–1877. https://doi.org/10.1177/0149206321995575
Berrone, P., Fosfuri, A., Gelabert, L., & Gomez-Mejia, L. R. (2013). Necessity as the mother of ‘green’inventions: Institutional pressures and environmental innovations. Strategic Management Journal, 34(8), 891–909. https://doi.org/10.1002/smj.2041
Cornell, B. (2020). ESG preferences, risk and return. European Financial Management, 27(1), 12–19. https://doi.org/10.1111/eufm.12295
Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal of Business Ethics, 168(2), 315–334.
Fernando, Y., & Wah, W. X. (2017). The impact of eco-innovation drivers on environmental performance: Empirical results from the green technology sector in Malaysia. Sustainable Production and Consumption, 12, 27–43. https://doi.org/10.1016/j.spc.2017.05.002
Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917
Galema, R., Plantinga, A., & Scholtens, B. (2008). The stocks at stake: Return and risk in socially responsible investment. Journal of Banking & Finance, 32(12), 2646–2654. https://doi.org/10.1016/j.jbankfin.2008.06.002
Gillan, S. L., Koch, A., & Starks, L. T. (2021). Firms and social responsibility: A review of ESG and CSR research in corporate finance. Journal of Corporate Finance, 66, 101889. https://doi.org/10.1016/j.jcorpfin.2021.101889
Gong, Y., Yan, C., & Ho, K.-C. (2021). The effect of managerial ability on corporate social responsibility and firm value in the energy industry. Corporate Social Responsibility and Environmental Management, 28(2), 581–594.
Huang, D. Z. X. (2021). Environmental, social and governance (ESG) activity and firm performance: A review and consolidation. Accounting & Finance, 61(1), 335–360. https://doi.org/10.1111/acfi.12569
Islam, T., Islam, R., Pitafi, A. H., Xiaobei, L., Rehmani, M., Irfan, M., & Mubarak, M. S. (2021). The impact of corporate social responsibility on customer loyalty: The mediating role of corporate reputation, customer satisfaction, and trust. Sustainable Production and Consumption, 25, 123–135. https://doi.org/10.1016/j.spc.2020.07.019
Javed, M., Rashid, M. A., Hussain, G., & Ali, H. Y. (2020). The effects of corporate social responsibility on corporate reputation and firm financial performance: Moderating role of responsible leadership. Corporate Social Responsibility and Environmental Management, 27(3), 1395–1409. https://doi.org/10.1002/csr.1892
Jiang, C., & Liu, D. (2024). Effects of venture capital on green technology innovation in new energy vehicle industry in China. Energy & Environment, 35(1), 418–437. https://doi.org/10.1177/0958305X221130135
Li, R. Y. M., Wang, Q., Zeng, L., & Chen, H. (2023). A Study on Public Perceptions of Carbon Neutrality in China: Has the Idea of ESG Been Encompassed? Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.949959
Liu, J. (2022). Research on the influence mechanism of carbon information disclosure quality on corporate value creation based on ESG concept [PhD Thesis, Hefei University of Technology]. https://kns.cnki.net/KCMS/detail/detail.aspx?dbcode=CDFD&dbname=CDFDTEMP&filename=1023427836.nh&v=
Luo, G., Guo, J., Yang, F., & Wang, C. (2023). Environmental regulation, green innovation and high-quality development of enterprise: Evidence from China. Journal of Cleaner Production, 418, 138112. https://doi.org/10.1016/j.jclepro.2023.138112
Ng, A. C., & Rezaee, Z. (2015). Business sustainability performance and cost of equity capital. Journal of Corporate Finance, 34, 128–149. https://doi.org/10.1016/j.jcorpfin.2015.08.003
Odriozola, M. D., & Baraibar-Diez, E. (2017). Is Corporate Reputation Associated with Quality of CSR Reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121–132. https://doi.org/10.1002/csr.1399
Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.
Qian, S. (2024). The effect of ESG on enterprise value under the dual carbon goals: From the perspectives of financing constraints and green innovation.
Rabaya, A. J., & Saleh, N. M. (2022). The moderating effect of IR framework adoption on the relationship between environmental, social, and governance (ESG) disclosure and a firm’s competitive advantage. Environment, Development and Sustainability, 24(2), 2037–2055. https://doi.org/10.1007/s10668-021-01519-5
Sadiq, M. (2020). The impact of environmental, social and governance index on firm value: Evidence from Malaysia. International Journal of Energy Economics and Policy.
Wang, Z., Li, X., Xue, X., & Liu, Y. (2022). More government subsidies, more green innovation? The evidence from Chinese new energy vehicle enterprises. Renewable Energy, 197, 11–21. https://doi.org/10.1016/j.renene.2022.07.086
Wieczorek-Kosmala, M., Marquardt, D., & Kurpanik, J. (2021). Drivers of sustainable performance in European energy sector. Energies, 14(21), Article 21. https://doi.org/10.3390/en14217055
Wong, W. C., Batten, J. A., Ahmad, A. H., Mohamed-Arshad, S. B., Nordin, S., & Adzis, A. A. (2021). Does ESG certification add firm value? Finance Research Letters, 39, 101593. https://doi.org/10.1016/j.frl.2020.101593
Wu, X., Bajuri, N. H., Khatib, S. F. A., & Zhang, Y. (2024). The nexus between ESG performance and green technology innovation: A conceptual study. International Journal of Academic Research in Business and Social Sciences, 14(12), 2029-2038. https://doi.org/10.6007/IJARBSS/v14-i12/24161
Xue, Y., Lakkanawanit, P., Suttipun, M., & Huang, S.-Z. (2024). ESG performance and enterprise value in Chinese tourism companies: The chained mediating roles of media attention and green innovation. Sustainability, 16(23), 10372. https://doi.org/10.3390/su162310372
Yang, X., Zhang, Z., Luo, W., Tang, Z., Gao, X., Wan, Z., & Zhang, X. (2019). The impact of government role on high-quality innovation development in Mainland China. Sustainability, 11(20), Article 20. https://doi.org/10.3390/su11205780
Zhang, D., & Lucey, B. M. (2022). Sustainable behaviors and firm performance: The role of financial constraints’ alleviation. Economic Analysis and Policy, 74, 220–233. https://doi.org/10.1016/j.eap.2022.02.003
Zhang, H., Huang, Y., & Zou, Z. (2024). Does share pledging affect corporate sustainability performance? Empirical evidence from an emerging market. Emerging Markets Review, 63, 101195. https://doi.org/10.1016/j.ememar.2024.101195
Zhang, Y., Wang, X., Guo, W., Guo, X., Wang, Q., & Tan, X. (2024). Does ESG performance affect the enterprise value of China’s heavily polluting listed companies? Sustainability, 16(7), 2826.
Zheng, Y., Wang, B., Sun, X., & Li, X. (2022). ESG performance and corporate value: Analysis from the stakeholders’ perspective. Frontiers in Environmental Science, 10, 1084632.
Wu, X., Bajuri, N. H., & Khatib, S. F. A. (2025). ESG Performance and Corporate Value: The Mediating Role of Green Innovation. International Journal of Academic Research in Business and Social Sciences, 15(12), 1528-1540.
Copyright: © 2025 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode