Environmental, Social, and Governance (ESG) Performance and Firm Value: Evidence from Chinese Manufacturing Firms

Abstract

In an era of great skepticism and distrust, companies’ ESG performances are under ever-increasing scrutiny. Stakeholders are urging companies to integrate ESG goals into their business strategic plans, practices, and value chains. Drawing upon a sample of publicly listed manufacturing companies in China from 2009 to 2021, this study aims to investigate the relationships between ESG performance and corporate values, especially the mediating role of financing constraints and the moderating effect of R&D investment intensity. Findings show that the ESG performance of manufacturing companies has a significant positive effect on corporate value. Financing constraints play a partial intermediary role between ESG performance and enterprise values. R&D investment intensity negatively moderates the relationship between ESG performance and manufacturing companies’ enterprise values. The heterogeneity study indicates that the beneficial impact of ESG performance on company value is particularly pronounced in the eastern region of China, non-state-owned companies, and heavily polluting industrial enterprises. Our findings provide important practical implications for a range of stakeholders, such as enterprises and investors, and enrich our current understanding of ESG research.