In this paper, we present a rational expectation equilibrium model in which fundamental and ESG traders hold heterogeneous valuations towards the risky asset. Trading occurs based on private information and price signal which is determined by a weighted combination of these diverse valuations. Our findings indicate that higher level of ESG rating disagreement increases ESG information uncertainty, thereby reducing trading intensity among ESG traders and attenuating the price informativeness about ESG. We further discover that allowing fundamental traders access to ESG information increases the coordination possibilities in the financial market, leading to multiple equilibria exhibiting characteristics of strategic substitutability and complementarity. Additionally, through measuring the ESG rating disparities among four prominent agencies in China, we deduce that ESG rating disagreement negatively impacts price informativeness by decreasing stock illiquidity.

The growing emphasis on Environmental, Social, and Governance (ESG) principles, particularly in corporate sectors, shapes investment trends and operational strategies, whose shift is supported by the increasing role of media in monitoring and influencing corporate ESG performance, thereby driving the energy innovation. Therefore, based on reported events from Baidu News and patent text information of Chinese A-share listed companies from 2012 to 2022, this study innovatively applied machine learning and text analysis to measure ESG news sentiment and corporate energy innovation indicators. Combing with reputation, stakeholder, and agency theories, we find that a good reputation conveyed by positive ESG textual sentiments in the media significantly promotes corporate energy innovation, and the effect is mainly realized through alleviating financing constraints and agency problems and promoting green investment. Further analysis shows that ESG news sentiment promotes corporate energy innovation mainly among private firms, non-growth-stage firms, high-energy-consuming firms, and regions with better green finance development and higher ESG governance intensity. From the perspective of ESG news content and information content, greater ESG news attention can also exert an energy innovation incentive effect, in which the incentive effect exerted by positive media sentiment in the environmental (E) and social (S) dimensions, as well as excellent attention, is more robust. This study provides new insights for promoting green and low-carbon development and understanding the external governance role of media in corporate ESG development.

Environmental disclosure in emerging markets remains poorly understood, despite its critical role in sustainability governance. Here, we analyze 42,129 firm-year environmental disclosures from 4,571 Chinese listed firms (2008-2022) using machine learning techniques to characterize disclosure patterns and regulatory responses. We show that increased disclosure volume primarily comprises boilerplate content rather than material information. Cross-sectional analyses reveal systematic variations across industries, with manufacturing and high-pollution sectors exhibiting more comprehensive disclosures than consumer and technology sectors. Notably, regional rankings in environmental disclosure volume do not align with local economic development levels. Through examination of staggered regulatory implementation, we demonstrate that market-based mechanisms generate more substantive disclosures compared to command-and-control approaches. These results provide empirical evidence that firms strategically manage environmental disclosures in response to institutional pressures. Our findings have important implications for regulatory design in emerging markets and advance understanding of voluntary disclosure mechanisms in sustainability governance.

It has been widely recognized that firms’ environmental, social, and governance (ESG) performances are crucial for shaping their information environments. Nonetheless, the impact of ESG performances on important analyst report attributes still remains clear. Our study reveals that superior firm. ESG performances significantly enhance the analyst report readability. The mechanism analysis demonstrates that this effect is primarily driven by increased information accessibility (the information acquisition channel) and greater analysts’ research efforts (the analyst effort channel). As expected, this effect is more pronounced in firms operating in highly polluted industries, firms with opaque financial infomration and state-owned enterprises (SOEs). Finally, our findings reveal that the release of analyst reports triggers higher market reactions for firms with superior ESG performances. In overall, our study highlights the criticial role of firm ESG performances in boosting financial analysts’ information production process.

Utilizing data from Chinese A-share listed companies, this study investigates the effects of digital transformation (DT) on total factor productivity (TFP) and the moderating function of ESG performance. The results indicate that DT boosts TFP, but ESG performance negatively moderates this effect, revealing the green paradox. A dynamic model of factor allocation efficiency shows that DT improves capital allocation by reducing financing constraints, information asymmetry, and enhancing operational capacity. However, ESG weakens the positive link between DT and operational capacity, thus diminishing its impact on TFP. Similarly, DT increases labor productivity, but ESG undermines this effect by weakening the link between DT and labor efficiency. The positive impact of DT is stronger when firms focus on ‘Practical Application Technologies’ rather than ‘Underlying Technologies’. This effect is especially evident in smaller, asset-intensive, non-state-owned firms, and those located in the Beijing-Tianjin-Hebei region. Additionally, ESG’s negative moderation is more pronounced where DT exerts a stronger positive influence. A notable distinction emerges: asset-intensive firms gain more from DT in terms of TFP, whereas ESG’s adverse effect is stronger in labour-intensive firms. This study offers a novel perspective on the interplay between DT, ESG performance, and productivity. It provides valuable insights for firms seeking to align digital strategies with ESG goals, thereby fostering technological innovation alongside sustainable development.

This paper investigates how institutional investors’ site visits affect firm productivity by using a dataset of China’s A-share listed firms. The findings reveal that site visits have a constructive effect on firm productivity. Moreover, mechanism analysis indicates that reducing information asymmetry and improving stock price informativeness are two channels through which site visits influence firm productivity. Heterogeneity analysis demonstrates that the nexus between site visits and firm productivity is more pronounced for non-state-owned firms and firms with intenser product market competition. Overall, this study brings new insights into the benefits of site visits and highlights the importance of investor activism.

This paper aims to clarify the relationship between key audit matters (KAMs) disclosure and corporate financialization. The findings reveal that key audit matters (KAMs) disclosure can provide incremental information value, thereby impeding corporate financialization in China. Moreover, this effect is more pronounced in the samples with low media attention, low shareholding of institutional investors, and non-state-owned enterprises. Further research indicates that reducing managerial myopia and easing financing constraints serve as key channels through which key audit matters (KAMs) disclosure affects corporate financialization. This study provides empirical evidence on efficiently preventing excessive financialization of enterprises, as well as some insights for mitigating systemic financial risks from the key audit matters (KAMs) disclosure perspective.

This paper extracts investor risk concern from the text of investormanagement communications and examines their impact on insider opportunistic sales. Utilizing data from listed companies holding online earnings communication conferences (OECCs) in China from 2007 to 2022, we find that heightened investor risk concern significantly curbs insider opportunistic sales, as manifested by reduced frequency and magnitude of such transactions. This governance effect of investor risk concern persists irrespective of motivation strength behind opportunistic sales. Further analysis reveals that the governance effect intensifies when investors exhibit superior information processing capabilities and when management’s risk statements better align with investor expectations. Notably, while mitigating opportunistic sales, elevated investor risk concern also significantly decreases the firm’s cost of equity capital. Our findings underscore the importance of fostering transparent and engaging investor-management communication in promoting effective corporate governance and mitigating insider misconduct.

Based on 5-minute high-frequency trading data, we examine the time-varying causal relationship between herding behavior and multiscale spillovers (return, volatility, skewness, and kurtosis) in the Chinese stock market. We employ the novel time-varying Granger causality test proposed by Shi et al. (2018), which is based on the recursive evolving algorithm developed by Phillips et al. (2015a, 2015b), to identify real-time causal relationships and capture possible changes in the causal direction. Our findings reveal a strong relationship between herding and spillover effects, particularly with odd-moment (return and skewness) spillovers. For most of the study period, a bidirectional causal relationship was found between herding and odd-moment spillovers. These results imply that herding behavior is a key driver of spillover effects, especially return and skewness spillovers, which are primarily transmitted through the information channel. By contrast, volatility and kurtosis spillovers are more strongly driven by real and financial linkages. Furthermore, spillover effects also affect herding behavior, highlighting the intricate feedback loop between investor behavior and risk transmission.

This paper examines bond trading activity and transaction cost differences between the bilateral Over-the-Counter (OTC) and the centralized Central Limit Order Book (CLOB) venues in the China interbank government bonds market, structured as all-to-all. Using a novel trade-level dataset, we estimate that CLOB reduces transaction costs by 0.66 basis points compared to OTC, highlighting the efficiency of its centralized trading mechanism. Furthermore, our analysis of cross-venue selection patterns reveals that the CLOB venue disproportionately facilitates core traders, orders with standardized sizes and settlement speeds, and newly issued bond trades. Despite CLOB’s cost advantages, the continued use of OTC is justified by its unique benefits, including mitigating information leakage, enabling designated counterparties, and facilitating position rebalancing. These findings offer insights into how market microstructure and trading mechanism affect asset liquidity.