Research on the Impact of ESG Performance on Corporate Risk Taking

Weiru Zhang; Zhiyu An

doi:10.54097/th549p95

Authors

Weiru Zhang
Zhiyu An

DOI:

https://doi.org/10.54097/th549p95

Keywords:

ESG performance, enterprise risk-taking, financial constraint, CEO overconfidence.

Abstract

This paper presents the findings of an empirical investigation into the relationship between improvements in ESG performance and the level of enterprise risk-taking. The analysis is based on a sample of Shanghai and Shenzhen A-share listed companies from 2010 to 2022. The results demonstrate that an enhancement in ESG performance markedly diminishes the extent of corporate risk-taking. The impact mechanism test illustrates that the advancement of ESG performance will curtail the executive's overconfidence, thereby impeding the enterprises risk-taking. In this context, the financing constraint exerts a "masking effect", whereby the inhibition effect of CEO overconfidence outweighs the promotion effect of financing constraints.

Downloads

Download data is not yet available.

References

[1] FANG Xianming, HU Ding. Corporate ESG Performance and Innovation: Empirical Evidence from A-share Listed Companies. Economic Research Journal, 2023, 58 (02): 91 - 106.

[2] SONG Ke, XU Lei, LI Zhen, WANG Fang. ESG Investment and Bank Liquidity Creation: The Moderating Effect of Economic Policy Uncertainty. Journal of Financial Research, 2022 (02): 61 - 79.

[3] WANG Yandong, WANG Yaqi. Corporate ESG performance, risk-taking and green technological innovation. Friends of Accounting, 2023 (10): 94 - 102.

[4] Bernile, G., Bhagwat, V., & Rau, P. R. What does not kill you will only make you more risk-loving: Early-life disasters and CEO behavior. The Journal of Finance, 2017, 72 (1), 167 – 206.

[5] Gopalan, R., Gormley, T. A., & Kalda, A. It’s not so bad: Director bankruptcy experience and corporate risk-taking [J]. Journal of Financial Economics, 2021, 142 (1), 261 – 292.

[6] TAN Jinsong, HUANG Renyu, ZHANG Jingxin. ESG Performance and Corporate Risk: An Explanation from a Resource Acquisition Perspective. Journal of Management Science, 2022, 35 (5): 3 - 18.

[7] Wang Jitian, Ma Shan, Tian Boao. ESG Performance and Stock Price Crash Risk——Based on the Moderating Effect of Investor Sentiment and Executive Overconfidence. Journal Of Financial Development Research, 2022 (10): 65 - 72.

[8] XU Guanghua, REN Qin, QIAN Ming. Economic Policy Uncertainty and Corporate ESG Performance. Finance and Accounting Monthly, 2023, 44 (11): 151 - 160.

[9] ZHANG Yunmeng. Corporate ESG Performance, Financing Constraints and Green Technological Innovation. Commercial Accounting, 2021 (11): 33 - 39.