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Effects of equity incentives on corporate ESG performance–Multiperiod difference-in-differences method

Author

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  • Wang, Hang
  • Liu, Haiying

Abstract

This study evaluates the impact of corporate equity incentives on ESG performance using a difference-in-differences model with multiple time points, based on data from A-share listed companies spanning 2007–2022. The study finds that applying equity incentives improves enterprise ESG performance, primarily by improving corporate governance. Mechanism analyses show that equity incentives affect ESG performance by lowering agency costs and increasing research and development investment. This study demonstrates how equity incentive systems can help managers focus on ESG performance. It demonstrates the positive effects of market changes, which are critical to increasing corporate sustainability.

Suggested Citation

  • Wang, Hang & Liu, Haiying, 2025. "Effects of equity incentives on corporate ESG performance–Multiperiod difference-in-differences method," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s1544612325004544
    DOI: 10.1016/j.frl.2025.107191
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    References listed on IDEAS

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    Cited by:

    1. Sun, Hongduo & Shang, Hongyun, 2025. "The spillover effect of ESG performance in supply Chain networks: An empirical analysis from chinese listed companies," Finance Research Letters, Elsevier, vol. 84(C).

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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