The Impact and Mechanism of ESG Performance on Corporate Continuous Innovation: Evidence from China
Abstract
:1. Introduction
2. Literature Review and Research Hypothesis
2.1. Literature Review
2.2. Research Hypotheses
2.2.1. ESG Performance and Corporate Continuous Innovation
2.2.2. ESG Performance, Financing Constraints, and Corporate Continuous Innovation
2.2.3. ESG Performance, Social Trust, and Corporate Continuous Innovation
2.2.4. ESG Performance, Agency Costs, and Corporate Continuous Innovation
2.2.5. ESG Performance, Human Capital, and Corporate Continuous Innovation
2.2.6. ESG Performance, Social Capital, and Corporate Continuous Innovation
3. Research Design
3.1. Sample Selection
3.2. Variable Definitions
3.2.1. Dependent Variable
3.2.2. Independent Variable
3.2.3. Control Variables
3.3. Model Setup
3.4. Descriptive Statistics
3.5. Correlation Test
4. Empirical Results and Analysis
4.1. Benchmark Regression Results
4.2. Endogeneity Tests
4.2.1. Lagging Independent Variables
4.2.2. Instrumental Variables Method
4.2.3. Propensity-Score-Matching Method (PSM)
4.2.4. Adding Omitted Variables
4.3. Robustness Tests
4.3.1. Replacement of Dependent Variables
4.3.2. Replacement of Independent Variables
- (1)
- The nine ratings classified by the CSI ESG rating were based on the disclosure scores. Here, the independent variables were re-tested by replacing the ESG score (ESG1), as shown in column (2) of Table 8, and the results were still significantly positively correlated.
- (2)
- Different third-party ESG rating agencies have different evaluation systems, which results in different ESG ratings. To avoid the inconsistency of ESG performance due to different ESG ratings, this study used the Bloomberg ESG score (ESG2) as an independent variable. Bloomberg statistics on the ESG ratings of Chinese listed companies have fewer sample observations. This study used the currently existing Bloomberg ESG rating data as an independent variable for robustness testing, as shown in column (3) of Table 8, and the results remained significant.
5. Further Discussion
5.1. Mechanism Tests
5.1.1. Alleviating Financing Constraints
5.1.2. Increase Social Trust
5.1.3. Reducing Agency Costs
5.1.4. Valuing Human Capital
5.1.5. Increasing Social Capital
5.2. Heterogeneity Tests
5.2.1. Nature of Equity
5.2.2. Degree of Marketization
5.2.3. Impact of Major Public Health Events
5.3. Extensive Research
5.3.1. Life-Cycle-Based Test
5.3.2. Impact of ESG Performance on Innovation Resilience
6. Conclusions and Implications
6.1. Research Conclusions
6.2. Policy Suggestions and Managerial Implications
6.3. Limitations and Future Research
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Variable Category | Variable Symbol | The Variable Name | Variable Description |
---|---|---|---|
Dependent variable | OIP | Continuous innovation | Continuous innovation was assessed through post-period comparisons of innovation output indicators, the formula for which is shown above |
Independent variable | ESG | ESG performance | CSI ESG ratings were used; assignment rating values 1–9 were assigned |
Control variables | Big1 | Shareholding concentration | The shareholding ratio of the largest shareholder |
Indep | Board independence | The proportion of independent directors | |
Cashassets | Operating net cash flow | The ratio of the net cash flow from operations to the total assets | |
Tobinq | Market value | Corporate market value divided by replacement cost | |
Roe | Return on net assets | Net income divided by net assets | |
Staff | Staff size | The number of staff | |
Executives | Executives size | The number of executives | |
Fage | Corporate years | The number of years that the firm has been established |
Variables | N | Mean | S.D. | Min | Median | Max |
---|---|---|---|---|---|---|
OIP | 27,094 | 1.556 | 3.876 | 0 | 0.3836 | 28.92 |
ESG | 27,094 | 4.194 | 1.061 | 1 | 4 | 8 |
Big1 | 27,094 | 34.16 | 14.58 | 8.646 | 32.07 | 73.41 |
Indep | 27,094 | 37.66 | 5.342 | 33.33 | 36.36 | 57.14 |
Cashassets | 27,094 | 0.0493 | 0.0658 | −0.137 | 0.0476 | 0.239 |
Tobinq | 27,094 | 2.6390 | 1.866 | 0.84 | 2.042 | 10.95 |
Roe | 27,094 | 0.0731 | 0.114 | −0.488 | 0.078 | 0.354 |
Staff | 27,094 | 0.5320 | 1.057 | 0.0193 | 0.205 | 7.632 |
Executives | 27,094 | 6.4680 | 2.441 | 1 | 6 | 40 |
Fage | 27,094 | 2.8880 | 0.354 | 0.693 | 2.944 | 4.159 |
OIP | ESG | Big1 | Indep | Cashassets | Tobinq | Roe | Staff | Executives | Fage | |
---|---|---|---|---|---|---|---|---|---|---|
OIP | 1 | |||||||||
ESG | 0.085 *** | 1 | ||||||||
Big1 | 0.035 *** | 0.091 *** | 1 | |||||||
Indep | 0.044 *** | 0.073 *** | 0.051 *** | 1 | ||||||
Cashassets | 0.019 *** | 0.083 *** | 0.099 *** | 0.004 | 1 | |||||
Tobinq | −0.072 *** | −0.024 *** | −0.044 *** | 0.034 *** | 0.113 *** | 1 | ||||
Roe | 0.027 *** | 0.145 *** | 0.085 *** | −0.012 * | 0.253 *** | 0.111 *** | 1 | |||
Staff | 0.377 *** | 0.119 *** | 0.167 *** | 0.100 *** | 0.072 *** | −0.114 *** | 0.026 *** | 1 | ||
Executives | 0.091 *** | 0.120 *** | −0.008 | −0.056 *** | −0.007 | −0.071 *** | 0.048 *** | 0.153 *** | 1 | |
Fage | 0.031 *** | −0.029 *** | −0.097 *** | 0.004 | 0.050 *** | −0.132 *** | −0.052 *** | −0.010 | −0.010 | 1 |
Variables | OIP | OIP | OIP |
---|---|---|---|
ESG | 0.1524 *** | 0.1627 *** | 0.1306 *** |
(5.0911) | (5.5575) | (4.5663) | |
Big1 | −0.0004 | ||
(−0.0701) | |||
Indep | −0.0155 ** | ||
(−1.9966) | |||
Cashassets | −0.5526 * | ||
(−1.7701) | |||
Tobinq | −0.0211 | ||
(−1.1797) | |||
Roe | 0.4569 ** | ||
(2.4854) | |||
Staff | 0.8814 *** | ||
(4.4452) | |||
Executives | 0.0048 | ||
(0.1975) | |||
Fage | 1.3913 *** | ||
(2.6505) | |||
Constant | 0.9166 *** | −0.5813 | −3.7279 ** |
(7.3022) | (−0.8712) | (−2.5516) | |
Industry | No | Yes | Yes |
Year | No | Yes | Yes |
N | 27,094 | 27,094 | 27,094 |
R2 | 0.003 | 0.077 | 0.120 |
Variables | OIP | OIP | OIP |
---|---|---|---|
L.ESG | 0.1257 *** | ||
(4.3286) | |||
L2.ESG | 0.1310 *** | ||
(4.6577) | |||
L3.ESG | 0.0797 *** | ||
(2.7483) | |||
Controls | Yes | Yes | Yes |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 21,497 | 18,088 | 15,306 |
R2 | 0.107 | 0.086 | 0.072 |
Variables | First-Stage Regression | Second-Stage Regression |
---|---|---|
ESG | OIP | |
Fundnum | 0.0098 *** | |
(6.59) | ||
ESG-hat | 2.5227 *** | |
(2.8213) | ||
Controls | Yes | Yes |
Industry | Yes | Yes |
Year | Yes | Yes |
N | 27,094 | 27,094 |
Variables | OIP | OIP |
---|---|---|
(1) | (2) | |
ESG | 0.1094 *** | 0.1271 *** |
(3.0153) | (4.4602) | |
Controls | Yes | Yes |
Industry | Yes | Yes |
Year | Yes | Yes |
N | 13,129 | 27,094 |
R2 | 0.109 | 0.123 |
Variables | Inv | OIP | OIP |
---|---|---|---|
(1) | (2) | (3) | |
ESG | 0.0007 *** | ||
(3.3973) | |||
ESG1 | 0.0307 *** | ||
(5.0351) | |||
ESG2 | 0.0517 *** | ||
(3.4885) | |||
Controls | Yes | Yes | Yes |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 25,433 | 27,094 | 9289 |
R2 | 0.031 | 0.121 | 0.153 |
Variables | SA (1) | SAt + 1 (2) | Credit (3) | AC1 (4) | AC2 (5) | Salary1 (6) | Salary2 (7) | Degree (8) | Eigenvector (9) |
---|---|---|---|---|---|---|---|---|---|
ESG | 0.0046 *** (7.5810) | 0.0055 *** (8.7149) | 0.0026 ** (1.9948) | −0.0022 *** (−3.6587) | −0.0018 *** (−4.8873) | 0.0265 *** (2.8842) | 0.0214 *** (4.6191) | 0.0089 *** (8.8298) | 0.0004 *** (3.9629) |
Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Industry | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Year | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
N | 27,094 | 21,497 | 27,094 | 27,094 | 27,094 | 27,094 | 27,094 | 27,094 | 27,094 |
R2 | 0.897 | 0.888 | 0.020 | 0.194 | 0.281 | 0.198 | 0.357 | 0.264 | 0.014 |
Variables | OIP | OIP | OIP |
---|---|---|---|
ESG | 0.2148 *** (4.1850) | 0.5889 *** (4.7103 | 0.0564 * (1.8707) |
ESG × Soe | −0.1244 ** (−2.0908) | ||
Soe | 0.8026 *** (3.2038) | ||
ESG × Law | −0.0615 *** (−3.8226) | ||
Law | 0.1785 ** (2.4113) | ||
ESG × Covid | 0.2083 *** (4.6916 | ||
Covid | −0.5529 (−1.3174) | ||
Controls | Yes | Yes | Yes |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 27,094 | 27,094 | 27,094 |
R2 | 0.121 | 0.122 | 0.121 |
Year | Mean | P25 | P50 | P75 |
---|---|---|---|---|
2017 | 191.59 | 0 | 19.60 | 109.35 |
2018 | 208.55 | 0 | 32.74 | 130.58 |
2019 | 198.61 | 0 | 47.22 | 151.03 |
2020 | 211.02 | 0 | 43.83 | 149.25 |
2021 | 193.97 | 0 | 36.96 | 138.80 |
2022 | 104.98 | 0 | 21.49 | 75.57 |
Different Stages | Operating Cash Flow | Investment Cash Flow | Financing Cash Flow |
---|---|---|---|
Formative years | − | − | + |
+ | − | + | |
Maturity | + | − | − |
Recession | − | − | − |
+ | + | + | |
+ | + | − | |
− | + | + | |
− | + | − |
Variables | OIP Formative Years | OIP Maturity | OIP Recession |
---|---|---|---|
ESG | 0.1045 ** | 0.1150 ** | 0.0836 * |
(2.5067) | (2.4517) | (1.7835) | |
Controls | Yes | Yes | Yes |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 12,532 | 9789 | 4773 |
R2 | 0.182 | 0.102 | 0.062 |
Variables | R&D | Patent_All | Patent 1 | Patent 2 | Applied_All | Applied1 | Applied2 |
---|---|---|---|---|---|---|---|
ESG | 0.0380 *** | 0.0437 *** | 0.0419 *** | 0.0398 *** | 0.0422 *** | 0.0291 *** | 0.0480 *** |
(5.6406) | (5.0359) | (4.9317) | (4.5595) | (4.7697) | (3.5278) | (4.8605) | |
Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Industry | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Year | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
N | 27,094 | 27,094 | 27,094 | 27,094 | 21,497 | 21,497 | 21,497 |
R2 | 0.461 | 0.224 | 0.194 | 0.210 | 0.286 | 0.203 | 0.331 |
Variables | Eff_All | Eff1 | Eff2 |
---|---|---|---|
ESG | 0.0020 *** | 0.0019 *** | 0.0019 *** |
(4.1512) | (4.0710) | (3.8932) | |
Controls | Yes | Yes | Yes |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 27,094 | 27,094 | 27,094 |
R2 | 0.171 | 0.149 | 0.176 |
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Ren, L.; Cheng, Y. The Impact and Mechanism of ESG Performance on Corporate Continuous Innovation: Evidence from China. Sustainability 2024, 16, 7562. https://doi.org/10.3390/su16177562
Ren L, Cheng Y. The Impact and Mechanism of ESG Performance on Corporate Continuous Innovation: Evidence from China. Sustainability. 2024; 16(17):7562. https://doi.org/10.3390/su16177562
Chicago/Turabian StyleRen, Li, and Yanping Cheng. 2024. "The Impact and Mechanism of ESG Performance on Corporate Continuous Innovation: Evidence from China" Sustainability 16, no. 17: 7562. https://doi.org/10.3390/su16177562