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Corporate ESG performance and bankruptcy risk

Author

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  • Lin, Hong
  • Gu, Xinyu
  • Bao, Xianjun

Abstract

China's sustainable development push has increased corporate attention on environmental, social, and governance (ESG) performance. Although studies have examined the ESG impacts on stock volatility, credit risk, and default risk, limited studies have examined its relationship with bankruptcy risk. Using data from A-share listed companies in China from 2011 to 2020, we examine this relationship through signaling and legitimacy theories. Findings show a negative correlation between bankruptcy risk and ESG performance, moderated by green credit policy, finance development, and technology innovation. These findings are vital for facilitating low-carbon transition and high-quality development.

Suggested Citation

  • Lin, Hong & Gu, Xinyu & Bao, Xianjun, 2025. "Corporate ESG performance and bankruptcy risk," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s154461232500251x
    DOI: 10.1016/j.frl.2025.106987
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    References listed on IDEAS

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    1. Nian, Hua & Said, Fathin Faizah & Mohd Azam, Abdul Hafizh & Mohd Ariff, Noratiqah, 2025. "Does ESG implementation reduce bankruptcy risk of manufacturing and non-manufacturing firms? Evidence from dynamic panel threshold model," Finance Research Letters, Elsevier, vol. 85(PC).
    2. Shi, Lelai & Lin, Hong & Tan, Bing, 2025. "The impact of the coupling coordination between new-type urbanization and the digital economy on ecological efficiency," International Review of Financial Analysis, Elsevier, vol. 105(C).
    3. Ma, Tianfang & Li, Jinke, 2025. "Green credit policy, financing constraints, and total factor productivity of enterprises," Finance Research Letters, Elsevier, vol. 85(PC).
    4. Li, Xiaoshuai & You, Zhen, 2025. "The impact of ESG performance on firm value in the Chinese market," Finance Research Letters, Elsevier, vol. 85(PC).

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