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

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.

Downloads

Download data is not yet available.

References

[1] Li Z, Shao Y, Li Z. ESG Information Disclosure, Media Supervision, and Corporate Financing Constraints. [J]. Science Decision Making, 2022(7):1-26.

[2] Zhang Z, Jin X, Li G. Empirical Study of the Interactive and Cross-Period Influence between Corporate Social Responsibility and Financial Performance. [J]. Accounting Research, 2013(8):32-39.

[3] Feng S, Zhao S, Wu H. The Impact of FinTech on Corporate Financial Risk and Its Internal Mechanism—The Threshold Effect of Financial Regulation. [J]. Reform, 2021(10):84-100.

[4] Wang X, Cao F. Research on the Mediating Effect of Pledged Shares on Corporate Financial Risk Based on Structural Equation Modeling. [J]. Commercial Research, 2021(5):85-93.

[5] Xu G, Zhuo Y, Zhang Y. Does ESG Information Disclosure Increase Corporate Value? [J]. Finance & Accounting Communication, 2022(4):33-37.

[6] Tan J, Huang R, Zhang J. ESG Performance and Corporate Risk—An Explanation from the Perspective of Resource Acquisition. [J]. Management Science, 2022, 35(5):3-18.

[7] Dhaliwal D S, Li O Z, Tsang A, et. al. Voluntary Non-Financial Disclosure and the Cost of Equity Capital: The Case of Corporate Social Responsibility Reporting. [J]. Accounting Review, 2011, 86(1):59-100.

[8] Qiu M, Yin. Corporate ESG Performance and Financing Costs in the Context of Ecological Civilization Construction. [J]. Quantitative & Technical Economics, 2019, 36(3):108-123.

[9] Hang H, Xu S. Exploration of Corporate Financial Risk Identification and Control Under Digital Transformation. [J]. Finance and Accounting Communication, 2022, 2022(24):131-134.

[10] Liu L, Yang G. The Impact of Digital Construction on Corporate Investment Efficiency: Empirical Evidence from Listed Manufacturing Companies in China. [J]. Friends of Accounting, 2022(23):123-130.

[11] Altman E I. Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy[J]. Journal of Finance, 1968, 23(4):589-609.

[12] Bharath S T, Tyler S. Forecasting Default with the Merton Distance to Default Model. [J]. The Review of Financial Studies, 2008, 3(3).

[13] ] Jiang T. Mediation and Moderation Effects in Empirical Research on Causal Inference. [J]. China Industrial Economics, 2022(5):100-120.

[14] Wu F, Hu H, Lin H. Corporate Digital Transformation and Capital Market Performance—Empirical Evidence from Stock Liquidity. [J]. Management World, 2021, 37(7):130-144.

[15] Xiao H, Z, Li. Institutional Pressure, Executive Characteristics, and Corporate Environmental Information Disclosure. [J]. Economic Management, 2016, 38(3):168-180.

[16] Li Y, Li Z. Managerial Agency Behavior, Corporate Over investment, and Corporate Governance—An Empirical Study from the Perspective of Corporate Life Cycle. [J]. Management Review, 2012, 24(7):117-131.

Downloads

Published

25-11-2024

How to Cite

Zhan, W., & Jiang, L. (2024). The Impact of ESG Information Disclosure on Corporate Financial Risk—Evidence from Chinese Enterprises. Highlights in Business, Economics and Management, 44, 299-310. https://doi.org/10.54097/r0p5dx61