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Can companies’ participation in ESG ratings improve green innovation efficiency? Evidence from Chinese A-share listed companies

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  • Shen, Ling
  • Yang, Xiaozhong
  • Ma, Guangcheng

Abstract

This study uses data from Chinese A-share listed companies from 2001 to 2023. It constructs a dynamic network data envelopment analysis (DNDEA) model and a DID model to empirically study the relationship between corporate participation in ESG ratings and their green innovation efficiency (GIE). The study found that corporate participation in ESG ratings can significantly stimulate the improvement of GIE, and this finding remains valid after robustness tests. Mechanism analysis shows that ESG ratings can promote GIE by attracting investor attention and easing financing constraints and agency costs. Finally, heterogeneity analysis shows that the incentive effect of participating in ESG ratings is more significant for private companies, large companies, and companies in regions with a high degree of marketization.

Suggested Citation

  • Shen, Ling & Yang, Xiaozhong & Ma, Guangcheng, 2025. "Can companies’ participation in ESG ratings improve green innovation efficiency? Evidence from Chinese A-share listed companies," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325003393
    DOI: 10.1016/j.frl.2025.107075
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    Keywords

    ESG rating; Green innovation efficiency; DNDEA model; DID model;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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