The Impact of ESG Information Disclosure on Corporate Financial Risk—Evidence from Chinese Enterprises

Wenqian Zhan; Lin Jiang

doi:10.54097/r0p5dx61

Authors

Wenqian Zhan
Lin Jiang

DOI:

https://doi.org/10.54097/r0p5dx61

Keywords:

ESG Information Disclosure, Financial Risk, Financing Constraints, Digital Transformation.

Abstract

Currently, as society has placed increasing emphasis on environmental, social responsibility, and corporate governance (ESG) issues, a company's performance in ESG has gradually become an important indicator for assessing its sustainable development capabilities. However, there is limited research on how ESG information disclosure affects financial risk. This study empirically analyzes the impact of ESG information disclosure on corporate financial risk based on data from listed companies on the Chinese A-list companies from 2010 to 2022. The findings reveal that robust ESG information disclosure can significantly reduce corporate financial risk. This effect is mainly mediated through alleviating financing constraints and moderated by promoting digital transformation, which further enhances the impact of ESG disclosure in reducing company financial exposure. Further analysis shows that the effect of ESG information disclosure on reducing financial risk is more pronounced in companies located in the central and western regions, in non-highly polluting industries, and among growing and small-scale enterprises. This research provides valuable insights for corporate managers and policymakers seeking to improve ESG practices.

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