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When ESG news talks: How media sentiment shapes corporate financial behavior in China

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  • Tan, Weijie
  • Liu, Yiqian
  • Teng, Mingming

Abstract

News sentiment affects company practices. Using Baidu News reports spanning 2007–2022 on Chinese A-share listed companies as text data and machine learning and text analysis methods, this study measures environmental, social, and governance (ESG) news sentiment indices. This study examines the impact of ESG news sentiment on corporate financial asset allocation. Findings reveal that optimistic ESG news sentiment has a significant negative impact on corporate financial asset allocation. Mechanism analysis indicates that ESG news sentiment can restrain corporate financialization by facilitating corporate access to ESG-related financial support, reducing operational risks, and promoting real investments, which weakens risk aversion and profit-seeking motives. Further analysis reveals that the financialization governance function of ESG news sentiment is more prominent for private enterprises, during nonrecession periods, and for heavily polluting enterprises. Moreover, it is significant in regions with superior digital financial development and higher ESG governance intensity. From the perspective of ESG news content and information, the environmental and governance dimensions of news sentiment and neutral ESG news attention exhibit stronger financialization suppression effects. This study provides a new perspective for addressing financialization concerns and demonstrates the supervisory influence of the media on corporate sustainability.

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  • Tan, Weijie & Liu, Yiqian & Teng, Mingming, 2025. "When ESG news talks: How media sentiment shapes corporate financial behavior in China," Global Finance Journal, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:glofin:v:67:y:2025:i:c:s1044028325000882
    DOI: 10.1016/j.gfj.2025.101161
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