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ESG certification, green innovation, and firm value: A quasi-natural experiment based on SynTao Green Finance's ESG ratings: A pre-registered report

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  • Bai, Xiao
  • Zhao, Wenyao
  • Tian, Geran

Abstract

Green technology improvements are vital for sustainable growth. This pre-registered study examines the impact of environmental, social and governance (ESG) certification on green innovation and firm value, utilizing the first release of ESG ratings by SynTao Green Finance as a quasi-natural experiment. We conceptualize ESG certification as an incremental disclosure of corporate information and an external evaluation by the market. Our investigation focuses on the effects of ESG certification on both the quantity and quality of green innovation. Specifically, we analyze the mechanisms underlying these effects, testing the financing constraint effect and market monitoring effect on the quantity of green innovation, as well as the management opportunism effect on the quality of green innovation. Additionally, we explore whether the increase in green innovation driven by ESG certification enhances firm value. Our conclusions may provide significant implications for firms aiming for green development and for emerging markets seeking to improve ESG disclosure regulations.

Suggested Citation

  • Bai, Xiao & Zhao, Wenyao & Tian, Geran, 2024. "ESG certification, green innovation, and firm value: A quasi-natural experiment based on SynTao Green Finance's ESG ratings: A pre-registered report," Pacific-Basin Finance Journal, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:pacfin:v:86:y:2024:i:c:s0927538x2400204x
    DOI: 10.1016/j.pacfin.2024.102453
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    Cited by:

    1. Yue Meng & Xiaolei Yang, 2024. "Environmental Justice Specialization and Corporate ESG Performance: Evidence from China Environmental Protection Court," Sustainability, MDPI, vol. 16(21), pages 1-20, November.

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    More about this item

    Keywords

    ESG; Green innovation; Firm value; Financing constraint effect; Market monitoring effect; Management opportunism effect;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • 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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