The growing significance of sustainable development has underscored the importance of integrating corporate sustainability indicators into corporate strategies. As external stakeholders increasingly emphasize corporate environmential performance, social responsibility and governance (ESG), understanding its impact on corporate value becomes essential, especially in emerging markets like China. This research aims to bridge these knowledge gaps by empirically investigating the influence of ESG ratings on firms’ value among Chinese listed firms, with a special emphasis on the mediating roles played by financial distress and financing constraints. By analyzing data from listed companies of China over the period 2018 to 2022, this research explores the correlation between firms’ value and ESG ratings. The findings indicate a positive association between firms’ value and ESG ratings. Enhanced ESG ratings directly boost market valuation and indirectly elevate firm value by mitigating financing constraints and financial distress. Further analysis reveals the positive effects of ESG ratings are more noticeable in industries that are not heavily polluting and in state-owned enterprises. This research provides valuable insights for enterprise management by systematically examining how ESG ratings contribute to corporate value through the mitigation of financial distress and constraints, while also highlighting the variations in ESG strategy implementation across different types of enterprises.

The role of institutional investors in the development of Environmental, Social, and Governance (ESG) criteria lacks consensus in the academic community. This study utilizes a quasi-natural experiment involving Chinese mutual funds that have signed the United Nations Principles for Responsible Investment (UNPRI) to investigate whether institutional Investors’ ESG investment commitments can significantly reduce ESG rating disagreement among the companies in their portfolios. We first find that companies held by ESG commitment institutional Investors exhibit less disagreement in ESG rating compared to those held by Non-ESG commitment institutional Investors. we then show that institutional Investor’ ESG investment commitment influence ESG rating disagreement by enhancing the quality of ESG disclosure and attracting external ESG attention. We further discover that institutional investors’ ESG investment commitments significantly mitigates the ESG rating disagreement among domestic ESG rating agencies and firms with a higher level of corporate governance.

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.

ESG is emerging as a new benchmark for measuring a company's sustainable development capabilities and social impact. As a measure of ESG performance, ESG ratings are increasingly receiving attention from companies, the general public, and government institutions, and are becoming an important reference factor influencing their decision-making. This paper investigates the impact of corporate ESG ratings on Total Factor Productivity (TFP) and its mechanisms of action. Focusing on listed companies in China, we find that higher ESG ratings contribute to improving a company's TFP, and this conclusion remains valid after robustness tests and addressing endogeneity issues. Further exploration into the reasons behind this result reveals that ESG ratings can be seen as a signal that a company sends to the outside world, representing its overall performance. Higher ESG ratings enhance a company's TFP by reducing market financing constraints and obtaining government subsidies. Heterogeneity analysis shows that the positive impact of ESG ratings on TFP is more pronounced for companies with higher levels of attention, reputation, and audit quality. Additionally, we explore whether ESG ratings can serve as a predictive indicator for measuring a company's TFP. This hypothesis was tested using machine learning algorithms, and the results indicate that models incorporating ESG rating indicators significantly improve the accuracy of predicting a company's TFP capabilities.

This paper examines the impact of ESG rating divergence on stock price delays in the context of the Chinese capital market. We find that ESG rating divergence significantly increases the stock price delays. Mechanism analysis results suggest that ESG rating divergence affects stock price delays by reducing information transparency and firm internal control quality. Heterogeneous analysis results indicate that the impact of ESG rating divergence on stock price delays is more pronounced in high-tech firms and when investor sentiment is high.

Identifying and addressing the factors influencing the within-firm pay gaps has become a pressing issue amidst the widening global income inequality. This study investigates the impact of corporate ESG ratings on employee income and pay gaps using data from Chinese-listed companies between 2017 and 2021. The results suggest that ESG ratings significantly increase employee income. Further research indicates that ESG ratings exacerbate the within-firm pay gaps and income inequality due to the varying bargaining power among employees. This effect is particularly pronounced in non-state-owned and large-scale companies. This is also true for all kinds of companies in traditional and highly competitive industries. However, reducing agency costs and improving information transparency can help vulnerable employees with weaker bargaining power in income distribution to narrow their pay gaps. The research findings offer important insights to promote fair income distribution within companies and address global income inequality.

This paper examines the spillover effect of environmental regulations on firms’ green technological innovation, from the perspective of supply chain relationships. Analyzing data from Chinese listed companies, we find that the average environmental regulatory pressure faced by the client firms of a supplier firm enhances the green patent applications filed by the supplier firm, indicating that environmental regulatory pressure from clients spills over to suppliers. When the industries of suppliers are more competitive or the proportion of their sales from the largest client is higher, suppliers feel more pressured to engage in green innovation, resulting in more green patent applications. Thus, via their negotiation power, client firms can prompt supplier firms to innovate to meet their demand for green technologies. Finally, we show that this effect is particularly pronounced when supplier firms are located in highly marketized regions, receive low R&D government subsidies, or have high ESG ratings.

Based on institutions' general role and the specialty of motivated investors' relatively larger stake, we examine whether ownership by motivated investors is associated with the focal firm's ESG rating disagreement in China. Our results suggest that ownership by motivated investors can decrease the focal firm's ESG rating disagreement. That relationship is strengthened by a better internal or external information environment. What's more, ownership by motivated investors can increase the quality of ESG disclosure and the level of consensus ESG rating. ESG rating disagreement increases stock return volatility and price synchronicity, while motivated investors can mitigate those negative effects. Our results confirm that motivated investors have greater incentive and capability to discipline managers and influence corporate policies and actions even in an emerging market with weak investor protection and the popularity of exploration by ultimate controllers. That would shed valuable insights into the high-quality development of other emerging markets, especially those in south-east Asian.

This study explores the proclivity of institutional investors in China towards highESG stocks amidst the growth of ESG investment funds. Using A-share data from 2015-2022 and a Tobit model analysis, it is found that these investors indeed favor such stocks, particularly under extensive analyst coverage and in non-state-owned firms. However, rating discrepancies can impact this preference. The attraction lies in reduced operational risks and improved net profits. Notably, independent investors show a stronger ESG preference, especially within high-pollution industries. Thus, fostering ESG investment among institutional investors can improve resource allocation in China's capital market, favoring eco-friendly companies.

This paper explores the ethical dimensions of firm-level digitalisation and its impact on ESG metrics during a decade (2010-2020) of rapid technological progress, focusing on Chinese-listed companies. Utilising a text-based index to measure digitalisation, we find that while digitalisation positively influences ESG ratings, supporting resource-based and dynamic capability theories, its relationship with corruption reveals complex dynamics. Surprisingly, corruption strengthens digitalisation’s positive impact on ESG, raising concerns about technology being used to enhance ESG appearances artificially. A distinct difference emerges between state-owned enterprises (SOEs) and non-SOEs; SOEs use digitalisation more ethically and are less influenced by corruption, indicating a more responsible approach to technology adoption. Through examining cash holdings, internal controls, and audit fees, we unpack how corruption influences the digitalisation-ESG nexus. These insights underscore the need for policy that encourages ethical digitalisation and highlight the potential role of SOEs in leading the charge towards sustainable and ethical digitalisation.