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ESG performance, managerial ability and corporate investment efficiency

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  • Liu, Fang-Ju

Abstract

This paper selects A-share listed companies in China from 2017 to 2023 as the research sample to explore the relationship between corporate ESG performance and investment efficiency. Through empirical testing using a two-way fixed effects model, it is found that improvements in ESG ratings can significantly inhibit corporate inefficient investment behaviors, including underinvestment and overinvestment. Further analysis reveals that managerial capability plays a mediating role in the relationship between ESG performance and investment efficiency. Superior ESG performance enhances managerial capability, which in turn promotes investment efficiency. Heterogeneity analysis shows that the positive effect of ESG performance on investment efficiency is more pronounced in non-state-owned enterprises.

Suggested Citation

  • Liu, Fang-Ju, 2025. "ESG performance, managerial ability and corporate investment efficiency," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006762
    DOI: 10.1016/j.frl.2025.107416
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    References listed on IDEAS

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