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ESG, financial constraint and financing activities: A study in the Chinese market

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  • Xuejing Guo
  • Shi Li
  • Xiaoping Song
  • Zilin Tang

Abstract

This paper investigates the impact of Chinese firms' environmental, social, and governance (ESG) performance on their financial constraint and financing activities. We find a negative association between firms' ESG performance and their financial constraint driven by the Chinese government's commitment to tackling climate change. Compared with state‐owned enterprises (SOEs), non‐SOEs have alleviated their financial constraint through both equity and debt issuance, thanks to the stock price appreciation and green credit. High‐pollution firms benefit from both equity and debt issuance, while low‐pollution firms mainly finance through equity issuance. Our findings demonstrate the leading role of the Chinese government in its domestic capital markets.

Suggested Citation

  • Xuejing Guo & Shi Li & Xiaoping Song & Zilin Tang, 2024. "ESG, financial constraint and financing activities: A study in the Chinese market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(2), pages 1637-1663, June.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:2:p:1637-1663
    DOI: 10.1111/acfi.13196
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    References listed on IDEAS

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    Cited by:

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    4. Geng, Yini & Zheng, Zhiqiang & Yuan, Xuemei & Jiménez-Zarco, Ana Isabel, 2025. "ESG performance and total factor productivity of enterprises: the role of digitization," Research in International Business and Finance, Elsevier, vol. 77(PA).
    5. García-Meca, Emma & Martínez-Ferrero, Jennifer & Reverte, Carmelo, 2025. "The impact of European firms’ emissions reduction effectiveness on financial constraints: Evidence from the quintuple helix model perspective," Research in International Business and Finance, Elsevier, vol. 79(C).
    6. Yang Liu & Sameer Kumar & Huiqing Liu & Shun Li & Ziyun Zhou, 2025. "ESG performance, digital transformation, and green innovation," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-19, December.
    7. Nie, Song & Wang, Shihao & Ji, Qiang, 2025. "Break down data silos: Does public data openness improve corporate ESG performance?," International Review of Financial Analysis, Elsevier, vol. 106(C).
    8. Ma, Min & Zhang, Chengjun & Zhang, Rui, 2025. "The dynamic effects of evolution of ESG disclosure regimes on corporate financing constraints," International Review of Financial Analysis, Elsevier, vol. 107(C).
    9. Snarska, Małgorzata & Frydrych, Sylwia & Łukowski, Michał & Czech, Maria & Perez, Katarzyna, 2025. "Semiconductor game of thrones: A comprehensive study of geopolitical and equity market uncertainty transmission," International Review of Financial Analysis, Elsevier, vol. 106(C).

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