IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v65y2023ics0275531923001009.html
   My bibliography  Save this article

ESG disclosure and technological innovation capabilities of the Chinese listed companies

Author

Listed:
  • Chen, Lifeng
  • Khurram, Muhammad Usman
  • Gao, Yuying
  • Abedin, Mohammad Zoynul
  • Lucey, Brian

Abstract

The main objective of this study is to explore how ESG disclosure effectively promotes technological innovation capabilities (TIC) and also in different industries (green vs. high-tech). Further, examine the role of financing constraint (FC) in the relationship between the ESG disclosure and TIC. We employed the panel regression model, Causal step approach, Bootstrap mediation effect test, 2SLS, and GMM model. We used Bloomberg’s ESG disclosure score of China’s A-share listed companies from 2011 to 2019 (1); we found that the ESG disclosure has a significant relationship with corporate innovation indicators (OTI, STI, NSTI) and play a significant role in promoting TIC at different levels of corporate innovation (2) ESG disclosure of non-green (high-tech) industry is more effectively promote TIC than green (non-high tech) industry (3) ESG disclosure can promote corporate innovation by reducing the level of corporate financing constraints, and FC has a partial intermediary role between ESG and TIC.

Suggested Citation

  • Chen, Lifeng & Khurram, Muhammad Usman & Gao, Yuying & Abedin, Mohammad Zoynul & Lucey, Brian, 2023. "ESG disclosure and technological innovation capabilities of the Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923001009
    DOI: 10.1016/j.ribaf.2023.101974
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531923001009
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2023.101974?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jin, Man & Zhao, Shunan & Kumbhakar, Subal C., 2019. "Financial constraints and firm productivity: Evidence from Chinese manufacturing," European Journal of Operational Research, Elsevier, vol. 275(3), pages 1139-1156.
    2. Fatemi, Ali & Glaum, Martin & Kaiser, Stefanie, 2018. "ESG performance and firm value: The moderating role of disclosure," Global Finance Journal, Elsevier, vol. 38(C), pages 45-64.
    3. Martijn A. Boermans & Daan Willebrands, 2018. "Financial Constraints Matter: Empirical Evidence On Borrowing Behavior, Microfinance And Firm Productivity," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-24, June.
    4. Eduardo Duque-Grisales & Javier Aguilera-Caracuel, 2021. "Environmental, Social and Governance (ESG) Scores and Financial Performance of Multilatinas: Moderating Effects of Geographic International Diversification and Financial Slack," Journal of Business Ethics, Springer, vol. 168(2), pages 315-334, January.
    5. Nollet, Joscha & Filis, George & Mitrokostas, Evangelos, 2016. "Corporate social responsibility and financial performance: A non-linear and disaggregated approach," Economic Modelling, Elsevier, vol. 52(PB), pages 400-407.
    6. Clarence Tolliver & Hidemichi Fujii & Alexander Ryota Keeley & Shunsuke Managi, 2021. "Green Innovation and Finance in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 16(1), pages 67-87, January.
    7. Roland Bénabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    8. James S. Ang & Yingmei Cheng & Chaopeng Wu, 2014. "Does Enforcement of Intellectual Property Rights Matter in China? Evidence from Financing and Investment Choices in the High-Tech Industry," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 332-348, May.
    9. Hua Tang, 2022. "The Effect of ESG Performance on Corporate Innovation in China: The Mediating Role of Financial Constraints and Agency Cost," Sustainability, MDPI, vol. 14(7), pages 1-21, March.
    10. Bradford Cornell, 2021. "ESG preferences, risk and return," European Financial Management, European Financial Management Association, vol. 27(1), pages 12-19, January.
    11. Yuming Zhai & Zhenghuan Cai & Han Lin & Ming Yuan & Ye Mao & Mingchuan Yu, 2022. "Does better environmental, social, and governance induce better corporate green innovation: The mediating role of financing constraints," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1513-1526, September.
    12. Wenhao Song & Hongyan Yu, 2018. "Green Innovation Strategy and Green Innovation: The Roles of Green Creativity and Green Organizational Identity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(2), pages 135-150, March.
    13. Khan, Muhammad Arif, 2022. "ESG disclosure and Firm performance: A bibliometric and meta analysis," Research in International Business and Finance, Elsevier, vol. 61(C).
    14. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    15. Yam, Richard C. M. & Guan, Jian Cheng & Pun, Kit Fai & Tang, Esther P. Y., 2004. "An audit of technological innovation capabilities in chinese firms: some empirical findings in Beijing, China," Research Policy, Elsevier, vol. 33(8), pages 1123-1140, October.
    16. Bissoondoyal-Bheenick, Emawtee & Brooks, Robert & Do, Hung Xuan, 2023. "ESG and firm performance: The role of size and media channels," Economic Modelling, Elsevier, vol. 121(C).
    17. Linda Espahbodi & Reza Espahbodi & Norma Juma & Amy Westbrook, 2019. "Sustainability priorities, corporate strategy, and investor behavior," Review of Financial Economics, John Wiley & Sons, vol. 37(1), pages 149-167, January.
    18. Zhaozhao He & Stephen Ciccone, 2020. "Too much liquidity? Seemingly excess cash for innovative firms," The Financial Review, Eastern Finance Association, vol. 55(1), pages 121-144, February.
    19. Zhang, Xiaoke & Zhao, Xuankai & Qu, Linshan, 2021. "Do green policies catalyze green investment? Evidence from ESG investing developments in China," Economics Letters, Elsevier, vol. 207(C).
    20. Buhmann, Alexander & Fieseler, Christian, 2021. "Towards a deliberative framework for responsible innovation in artificial intelligence," Technology in Society, Elsevier, vol. 64(C).
    21. Gillan, Stuart L. & Koch, Andrew & Starks, Laura T., 2021. "Firms and social responsibility: A review of ESG and CSR research in corporate finance," Journal of Corporate Finance, Elsevier, vol. 66(C).
    22. Xiuping Li & Ye Yang, 2022. "Does Green Finance Contribute to Corporate Technological Innovation? The Moderating Role of Corporate Social Responsibility," Sustainability, MDPI, vol. 14(9), pages 1-17, May.
    23. Yi Zhang, 2022. "Analyst coverage and corporate social responsibility decoupling: Evidence from China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 620-634, May.
    24. Yu, Ellen Pei-yi & Luu, Bac Van, 2021. "International variations in ESG disclosure – Do cross-listed companies care more?," International Review of Financial Analysis, Elsevier, vol. 75(C).
    25. Milton Friedman, 2007. "The Social Responsibility of Business Is to Increase Its Profits," Springer Books, in: Walther Ch Zimmerli & Markus Holzinger & Klaus Richter (ed.), Corporate Ethics and Corporate Governance, pages 173-178, Springer.
    26. Jianzhuang Zheng & Muhammad Usman Khurram & Lifeng Chen, 2022. "Can Green Innovation Affect ESG Ratings and Financial Performance? Evidence from Chinese GEM Listed Companies," Sustainability, MDPI, vol. 14(14), pages 1-32, July.
    27. Z. Jun Lin & Shengqiang Liu & Fangcheng Sun, 2017. "The Impact of Financing Constraints and Agency Costs on Corporate R&D Investment: Evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 17(1), pages 3-42, March.
    28. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    29. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    30. DasGupta, Ranjan, 2022. "Financial performance shortfall, ESG controversies, and ESG performance: Evidence from firms around the world," Finance Research Letters, Elsevier, vol. 46(PB).
    31. Yuan, Gecheng & Ye, Qin & Sun, Yongping, 2021. "Financial innovation, information screening and industries’ green innovation — Industry-level evidence from the OECD," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    32. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    33. Dan Hanson & Tom Lyons & Jennifer Bender & Bruno Bertocci & Bobby Lamy, 2017. "Analysts' Roundtable on Integrating ESG into Investment Decision-Making," Journal of Applied Corporate Finance, Morgan Stanley, vol. 29(2), pages 44-55, June.
    34. Alkaraan, Fadi & Albitar, Khaldoon & Hussainey, Khaled & Venkatesh, VG, 2022. "Corporate transformation toward Industry 4.0 and financial performance: The influence of environmental, social, and governance (ESG)," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    35. Amal Aouadi & Sylvain Marsat, 2018. "Do ESG Controversies Matter for Firm Value? Evidence from International Data," Post-Print halshs-02007374, HAL.
    36. Muhammad Atif & Searat Ali, 2021. "Environmental, social and governance disclosure and default risk," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3937-3959, December.
    37. Bradford Cornell & Alan C. Shapiro, 2021. "Corporate stakeholders, corporate valuation and ESG," European Financial Management, European Financial Management Association, vol. 27(2), pages 196-207, March.
    38. Amal Aouadi & Sylvain Marsat, 2018. "Do ESG Controversies Matter for Firm Value? Evidence from International Data," Journal of Business Ethics, Springer, vol. 151(4), pages 1027-1047, September.
    39. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    40. Bolognesi, Enrica & Burchi, Alberto, 2023. "The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements," Research in International Business and Finance, Elsevier, vol. 64(C).
    41. Soh Young In & Dane Rook & Ashby Monk, 2019. "Integrating Alternative Data (Also Known as ESG Data) in Investment Decision Making," Global Economic Review, Taylor & Francis Journals, vol. 48(3), pages 237-260, July.
    42. Lozano, M. Belén & Martínez-Ferrero, Jennifer, 2022. "Do emerging and developed countries differ in terms of sustainable performance? Analysis of board, ownership and country-level factors," Research in International Business and Finance, Elsevier, vol. 62(C).
    43. Nicola Raimo & Alessandra Caragnano & Marianna Zito & Filippo Vitolla & Massimo Mariani, 2021. "Extending the benefits of ESG disclosure: The effect on the cost of debt financing," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1412-1421, July.
    44. Dongyang Zhang & Cao Wang & Yu Dong, 2023. "How Does Firm ESG Performance Impact Financial Constraints? An Experimental Exploration of the COVID-19 Pandemic," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(1), pages 219-239, February.
    45. Susanne Arvidsson & John Dumay, 2022. "Corporate ESG reporting quantity, quality and performance: Where to now for environmental policy and practice?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1091-1110, March.
    46. Tania Bizoumi & Socrates Lazaridis & Natassa Stamou, 2019. "Innovation in Stock Exchanges: Driving ESG Disclosure and Performance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 31(2), pages 72-79, June.
    47. Wang, Ying & Li, Mingsheng, 2022. "Credit policy and its heterogeneous effects on green innovations," Journal of Financial Stability, Elsevier, vol. 58(C).
    48. Xun Zhang & Biao Xu, 2019. "R&D Internationalization and Green Innovation? Evidence from Chinese Resource Enterprises and Environmental Enterprises," Sustainability, MDPI, vol. 11(24), pages 1-18, December.
    49. Amina Buallay & Reem Hamdan & Elisabetta Barone & Allam Hamdan, 2022. "Increasing female participation on boards: Effects on sustainability reporting," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 111-124, January.
    50. Rebecca M Henderson, 2021. "Changing the purpose of the corporation to rebalance capitalism [‘Towards Collaborative Community’]," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(4), pages 838-850.
    51. Vanessa Oltra & Maïder Saint Jean, 2009. "Sectoral systems of environmental innovation: an application to the French automotive industry," Post-Print hal-00274413, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaodong Teng & Kun-Shan Wu & Lopin Kuo & Bao-Guang Chang, 2023. "Investigating the double-edged sword effect of environmental, social and governance practices on corporate risk-taking in the high-tech industry," Oeconomia Copernicana, Institute of Economic Research, vol. 14(2), pages 511-549, June.
    2. Leogrande, Angelo & Leogrande, Domenico & Costantiello, Alberto, 2023. "The Impact of Patent Applications in the Context of the ESG Model at World Level," EconStor Preprints 273495, ZBW - Leibniz Information Centre for Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuming Zhai & Zhenghuan Cai & Han Lin & Ming Yuan & Ye Mao & Mingchuan Yu, 2022. "Does better environmental, social, and governance induce better corporate green innovation: The mediating role of financing constraints," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1513-1526, September.
    2. Chen, Zhongfei & Xie, Guanxia, 2022. "ESG disclosure and financial performance: Moderating role of ESG investors," International Review of Financial Analysis, Elsevier, vol. 83(C).
    3. Yang Yang & Jinmian Han, 2023. "Digital transformation, financing constraints, and corporate environmental, social, and governance performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3189-3202, November.
    4. Fafaliou, Irene & Giaka, Maria & Konstantios, Dimitrios & Polemis, Michael, 2022. "Firms’ ESG reputational risk and market longevity: A firm-level analysis for the United States," Journal of Business Research, Elsevier, vol. 149(C), pages 161-177.
    5. Khan, Muhammad Arif, 2022. "ESG disclosure and Firm performance: A bibliometric and meta analysis," Research in International Business and Finance, Elsevier, vol. 61(C).
    6. Remo-Diez, Nieves & Mendaña-Cuervo, Cristina & Arenas-Parra, Mar, 2023. "Exploring the asymmetric impact of sustainability reporting on financial performance in the utilities sector: A longitudinal comparative analysis," Utilities Policy, Elsevier, vol. 84(C).
    7. Hoang, Thi Hong Van & Pham, Linh & Nguyen, Thanh Thi Phuong, 2023. "Does country sustainability improve firm ESG reporting transparency? The moderating role of firm industry and CSR engagement," Economic Modelling, Elsevier, vol. 125(C).
    8. Chowdhury, Rajib & Doukas, John A. & Park, Jong Chool, 2021. "Stakeholder orientation and the value of cash holdings: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 69(C).
    9. Małgorzata Janicka & Artur Sajnóg, 2022. "The ESG Reporting of EU Public Companies—Does the Company’s Capitalisation Matter?," Sustainability, MDPI, vol. 14(7), pages 1-17, April.
    10. Andrieș, Alin Marius & Sprincean, Nicu, 2023. "ESG performance and banks’ funding costs," Finance Research Letters, Elsevier, vol. 54(C).
    11. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Journal of Business Ethics, Springer, vol. 148(3), pages 647-671, March.
    12. Radu-Alexandru Șerban & Diana Marieta Mihaiu & Mihai Țichindelean, 2022. "Environment, Social, and Governance Score and Value Added Impacts on Market Capitalization: A Sectoral-Based Approach," Sustainability, MDPI, vol. 14(4), pages 1-25, February.
    13. Xiaoling Yu & Kaitian Xiao, 2022. "Does ESG Performance Affect Firm Value? Evidence from a New ESG-Scoring Approach for Chinese Enterprises," Sustainability, MDPI, vol. 14(24), pages 1-40, December.
    14. DasGupta, Ranjan & Roy, Arup, 2023. "Firm environmental, social, governance and financial performance relationship contradictions: Insights from institutional environment mediation," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    15. Alan Kai Ming Au & Yi-Fan Yang & Huan Wang & Rui-Hong Chen & Leven J. Zheng, 2023. "Mapping the Landscape of ESG Strategies: A Bibliometric Review and Recommendations for Future Research," Sustainability, MDPI, vol. 15(24), pages 1-26, December.
    16. Lei Ruan & Heng Liu, 2021. "Environmental, Social, Governance Activities and Firm Performance: Evidence from China," Sustainability, MDPI, vol. 13(2), pages 1-16, January.
    17. Zhao Chen & Ling Hu & Xin He & Ziming Liu & Danni Chen & Weirui Wang, 2022. "Green Financial Reform and Corporate ESG Performance in China: Empirical Evidence from the Green Financial Reform and Innovation Pilot Zone," IJERPH, MDPI, vol. 19(22), pages 1-17, November.
    18. Yaghoub Abdi & Xiaoni Li & Xavier Càmara-Turull, 2022. "Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 5052-5079, April.
    19. Malik, Muhammad Farhan & Nowland, John & Buckby, Sherrena, 2021. "Voluntary adoption of board risk committees and financial constraints risk," International Review of Financial Analysis, Elsevier, vol. 73(C).
    20. Zhang, Dongna & Zhao, Zuoxiang & Lau, Chi Keung Marco, 2022. "Sovereign ESG and corporate investment: New insights from the United Kingdom," Technological Forecasting and Social Change, Elsevier, vol. 183(C).

    More about this item

    Keywords

    Environmental; Social and Governance (ESG) disclosures; Technological Innovation Capabilities (TIC); Green and High-tech industries; Financing Constraints (FC); Chinese listed companies;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923001009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.