Can the Relative ESG Gap Reduce Managerial Myopia? A Study Based on the “Tunnel Effect”

Abstract

ESG concepts are regarded as a feasible method for enterprises to obtain a sustainable competitive advantage, but whether enterprises can spontaneously and proactively implement ESG concepts is the key to the sustainable development of ESG. Focusing on listed companies with relatively slow ESG performance and carrying out investigations from the perspective of the “tunnel effect”, this study explores whether the relative ESG gap can motivate listed companies to learn and compete in ESG and whether this behavior can alleviate managerial myopia and achieve the long-term development of the company. This study reports that there is a “tunnel effect” in the relative ESG gap in listed companies with relatively lagging ESG performance; this should motivate such listed companies to improve their ESG performance and reduce managerial myopia through voluntary disclosure. Further results show that there is a “tunnel effect” in the relative ESG gap in both state-owned and non-state-owned listed companies. The learning behavior is more obvious in listed state-owned companies, and the reduction in management myopia via ESG performance is also stronger in such companies. This study expands the research on the influence of ESG on corporate behavioral decision making in the context of sustainable development, and it also provides useful references for reducing managerial myopia from the perspective of inter-firm learning competition.