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.

This study investigates the relationship between ESG (environmental, social, and governance) ratings and labor share at the firm level. Using data from Chinese A-share listed firms from 2011 to 2021, we find a significantly positive relationship between the two. Furthermore, we document that state-owned enterprises do not demonstrate a strong sense of political and social responsibility in their employee recruitment projects, while companies with high ESG ratings in East China could increase their labor share due to less stringent financial constraints. Finally, the employment-creation effect of ESG ratings is one of the important channels for improving labor share. Considering the increasing awareness of ESG concepts and the boom in ESG investing, our findings hold significant relevance for employees, directors, investors, and public policymakers.

Using data from Chinese A-share listed companies from 2010 to 2021, we examined the impact of ESG rating disagreement on stock price synchronicity and its mechanisms. We discovered that ESG rating disagreement increases stock price synchronicity by raising investors' information costs and reducing the efficiency of ESG information incorporation into prices. This effect is more pronounced when average ESG ratings are either low or high. Our findings highlight how ESG rating disagreement affects stock price synchronicity and provide insights for regulators to standardize rating criteria and foster a conducive ESG investment environment, promoting pricing efficiency in the capital markets.

As many ESG rating agencies have flourished to meet rising interests in ESG investing, we examine the information provider role of these rating agencies. We hypothesize that new ratings can add information useful to investors about rated firms besides any changes to the average level and dispersion in ratings. We exploited the empirical setting where the introduction of various ESG ratings in China is staggered over time and across firms. We show that an increase in the number of ratings by different agencies for a given firm will induce more mutual funds’ investments towards that firm. This is unexplained by rating inflation or rating shopping channels. We further show that such effect is more pronounced when incumbent and entrant agents provide complementary information. For different types of funds, we find different sensitivities to the arrival of new agents in accordance with their explicit requirements for ESG mandate. And interestingly ESG funds that track ESG indices are not responsive to new ratings as ESG indices are sticky in choosing the reference rating. We also provide evidence that the documented effects are not due to endogenous actions taken by incumbent agencies or the firms. Our paper provides interesting and causal evidence of the incremental information from additional ESG ratings which have important implications for the market competition and regulations of ESG rating agencies.

This study examines the impact of ESG rating events on innovation in China's new energy vehicle industry. The baseline Difference-in-Differences (DID) analysis demonstrates that ESG ratings promote innovation among new energy vehicle companies. A series of robustness tests, including parallel trend analysis and placebo tests, support the baseline results. The channel tests in the mechanism analyses indicate that ESG ratings promote innovation in new energy vehicle enterprises by increasing R&D investment and the number of R&D personnel. Other mechanism analyses suggest that ESG ratings also enhance innovation output and quality by stimulating green patent applications, encouraging joint patent applications, and increasing the number of high-quality patents.

This paper measures the “greenium” in China’s stock markets with data during 2011-2020. We find that the green stocks outperform the brown ones in China and public climate concern brings the greenium. Based on the phenomenon, with panel regression, we furtherly figure out that the firms’ stock returns are positively correlated with their ESG rating, and public climate concern strengthens the relationship, which suggests that China’s stock investors behavioral bias contributes to greenium.