Shangguan, X.; Shi, G.; Yu, Z. ESG Performance and Enterprise Value in China: A Novel Approach via a Regulated Intermediary Model. Sustainability2024, 16, 3247.
Shangguan, X.; Shi, G.; Yu, Z. ESG Performance and Enterprise Value in China: A Novel Approach via a Regulated Intermediary Model. Sustainability 2024, 16, 3247.
Shangguan, X.; Shi, G.; Yu, Z. ESG Performance and Enterprise Value in China: A Novel Approach via a Regulated Intermediary Model. Sustainability2024, 16, 3247.
Shangguan, X.; Shi, G.; Yu, Z. ESG Performance and Enterprise Value in China: A Novel Approach via a Regulated Intermediary Model. Sustainability 2024, 16, 3247.
Abstract
ESG (Environmental, Social, and Governance) responsibility fulfillment increasingly affects enterprise valuation. Although researchers debate about the precise effects, the prevailing view suggests a linear relationship between ESG performance and enterprise value. This study introduces a novel ESG responsibility performance metric through the Regulated Intermediary Model to delve into this relationship within the Chinese context. Our findings reveal an inverted U-shaped relationship between ESG performance and enterprise value, with financing constraints having a significant moderating effect. These findings remain robust after employing instrumental variables to mitigate potential endogeneity. Heterogeneity analysis demonstrates that this inverted U-shaped relationship is particularly pronounced in non-polluting and non-state-owned enterprises. Moreover, a comparison between equity and debt financing mechanisms underscores that improved ESG performance is associated with lower cost of equity financing, thereby enhancing enterprise value. Financial institutions are encouraged to leverage innovative financial instruments to diversify enterprise financing channels and alleviate financing constraints of enterprises that fulfill their ESG responsibilities.
Keywords
ESG; firm valuation; corporate sustainability; the Regulated Intermediary Model
Subject
Business, Economics and Management, Finance
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
