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How does corporate ESG performance affect stock liquidity? Evidence from China

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  • Wang, Kai
  • Li, Tingting
  • San, Ziyao
  • Gao, Hao

Abstract

This study examines whether and how corporate environmental, social, and governance (ESG) performance is associated with firm's stock liquidity. We find robust evidence that ESG performance statistically and significantly increases firm's stock liquidity. The results of channel tests indicate that ESG performance increases firm's stock liquidity by lowering corporate risk and gaining stakeholders' support. Additionally, we find that the positive effect of corporate ESG performance is driven by all the three dimensions. Collectively, our study highlights the importance of corporate ESG performance and its economic consequences.

Suggested Citation

  • Wang, Kai & Li, Tingting & San, Ziyao & Gao, Hao, 2023. "How does corporate ESG performance affect stock liquidity? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:pacfin:v:80:y:2023:i:c:s0927538x23001531
    DOI: 10.1016/j.pacfin.2023.102087
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    More about this item

    Keywords

    Corporate sustainability; ESG; Stock liquidity; Capital market; Risk prevention; Stakeholders;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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