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Corporate ESG performance and stock pricing efficiency

Author

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  • Chen, Shaowei
  • Wu, Zhiliang

Abstract

This study investigates the impact of environmental, social, and governance (ESG) performance on stock pricing efficiency in China, using panel data on Chinese listed A-share firms from 2013 to 2022. We find that corporate ESG performance significantly improves stock pricing efficiency. This conclusion remains unchanged after a series of robustness tests. Heterogeneity analysis reveals that a smaller firm size, lower institutional investor shareholding, and lower audit fees lead to a stronger effect of ESG performance on stock pricing efficiency. Moreover, mechanism tests suggest that ESG performance can improve stock pricing efficiency by calming investor sentiment and mitigating information asymmetry problems.

Suggested Citation

  • Chen, Shaowei & Wu, Zhiliang, 2025. "Corporate ESG performance and stock pricing efficiency," The North American Journal of Economics and Finance, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:ecofin:v:79:y:2025:i:c:s1062940825000804
    DOI: 10.1016/j.najef.2025.102440
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    Keywords

    ESG performance; Stock pricing efficiency; Investor sentiment; Information asymmetry;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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