IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i24p16597-d1000167.html
   My bibliography  Save this article

Does Fintech Development Enhance Corporate ESG Performance? Evidence from an Emerging Market

Author

Listed:
  • Deli Wang

    (School of Accounting, Guangdong University of Foreign Studies, 178 Waihuan East Road, Panyu District, Guangzhou 510006, China
    Research Center for Guangdong-Hong Kong-Macao Greater Bay Area Accounting and Economic Development, Guangdong University of Foreign Studies, 178 Waihuan East Road, Panyu District, Guangzhou 510006, China)

  • Ke Peng

    (School of Accounting, Guangdong University of Foreign Studies, 178 Waihuan East Road, Panyu District, Guangzhou 510006, China)

  • Kaiye Tang

    (School of Accounting, Guangdong University of Foreign Studies, 178 Waihuan East Road, Panyu District, Guangzhou 510006, China)

  • Yewei Wu

    (School of Economics and Management, Tongji University, 1239 Siping Road, Yangpu District, Shanghai 200092, China)

Abstract

The effectiveness of environmental, social, and governance (ESG) has been widely discussed and is often linked to corporate sustainability strategies. However, corporate ESG performance cannot be achieved without the support of financial development and the underlying mechanisms through which fintech development affects corporate ESG performance in emerging markets remain unexplored. Firms that are less financially constrained exhibit higher ESG performance in cities with better developed fintech. Moreover, the results remain robust after addressing the endogeneity between fintech development and ESG performance and using different city-level fintech indexes. Additionally, the results remain robust after addressing the endogeneity between fintech development and ESG performance and using different model specifications and variable measurement. Heterogeneity analysis suggests that the effect of fintech development on ESG performance is stronger for firms that are small, operate in technology industries, and have financial executives. These findings provide new insights into the role of fintech development in promoting sustainable social and economic development.

Suggested Citation

  • Deli Wang & Ke Peng & Kaiye Tang & Yewei Wu, 2022. "Does Fintech Development Enhance Corporate ESG Performance? Evidence from an Emerging Market," Sustainability, MDPI, vol. 14(24), pages 1-21, December.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:24:p:16597-:d:1000167
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/24/16597/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/24/16597/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Alexandre Sanches Garcia & Renato J. Orsato, 2020. "Testing the institutional difference hypothesis: A study about environmental, social, governance, and financial performance," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3261-3272, December.
    3. Ding, Na & Gu, Leilei & Peng, Yuchao, 2022. "Fintech, financial constraints and innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 73(C).
    4. 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.
    5. Arno Riedl & Paul Smeets, 2017. "Why Do Investors Hold Socially Responsible Mutual Funds?," Journal of Finance, American Finance Association, vol. 72(6), pages 2505-2550, December.
    6. Milton Friedman, 1971. "A Theoretical Framework for Monetary Analysis," NBER Books, National Bureau of Economic Research, Inc, number frie71-1, March.
    7. Liang, Quanxi & Li, Qiumei & Lu, Meiting & Shan, Yaowen, 2021. "Industry and geographic peer effects on corporate tax avoidance: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    8. Indrit Troshani & Nick Rowbottom, 2021. "Digital Corporate Reporting: Research Developments and Implications," Australian Accounting Review, CPA Australia, vol. 31(3), pages 213-232, September.
    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. Samuel Drempetic & Christian Klein & Bernhard Zwergel, 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review," Journal of Business Ethics, Springer, vol. 167(2), pages 333-360, November.
    11. Renneboog, Luc & Ter Horst, Jenke & Zhang, Chendi, 2011. "Is ethical money financially smart? Nonfinancial attributes and money flows of socially responsible investment funds," Journal of Financial Intermediation, Elsevier, vol. 20(4), pages 562-588, October.
    12. Peter Gomber & Jascha-Alexander Koch & Michael Siering, 2017. "Digital Finance and FinTech: current research and future research directions," Journal of Business Economics, Springer, vol. 87(5), pages 537-580, July.
    13. Deng, Xin & Kang, Jun-koo & Low, Buen Sin, 2013. "Corporate social responsibility and stakeholder value maximization: Evidence from mergers," Journal of Financial Economics, Elsevier, vol. 110(1), pages 87-109.
    14. Mark A Chen & Qinxi Wu & Baozhong Yang, 2019. "How Valuable Is FinTech Innovation?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 2062-2106.
    15. Thakor, Anjan V., 2020. "Fintech and banking: What do we know?," Journal of Financial Intermediation, Elsevier, vol. 41(C).
    16. Ting Yao & Liangrong Song, 2021. "Examining the differences in the impact of Fintech on the economic capital of commercial banks’ market risk: evidence from a panel system GMM analysis," Applied Economics, Taylor & Francis Journals, vol. 53(23), pages 2647-2660, May.
    17. Zhang, Dongyang & Lucey, Brian M., 2022. "Sustainable behaviors and firm performance: The role of financial constraints’ alleviation," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 220-233.
    18. Buchak, Greg & Matvos, Gregor & Piskorski, Tomasz & Seru, Amit, 2018. "Fintech, regulatory arbitrage, and the rise of shadow banks," Journal of Financial Economics, Elsevier, vol. 130(3), pages 453-483.
    19. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    20. Donghua Zhou & Min Bai & Xiaoqin Liang & Yafeng Qin, 2021. "The Early‐life Political Event Experience of the Chair of the Board and the Firm's Innovation Decision," Australian Accounting Review, CPA Australia, vol. 31(3), pages 186-212, September.
    21. Wen He & Yaowen Shan, 2016. "International Evidence on the Matching Between Revenues and Expenses," Contemporary Accounting Research, John Wiley & Sons, vol. 33(3), pages 1267-1297, September.
    22. Qin, Wei & Liang, Quanxi & Jiao, Yan & Lu, Meiting & Shan, Yaowen, 2022. "Social trust and dividend payouts: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    23. Meiting Lu & Yaowen Shan & Sue Wright & Yimeng Yu, 2020. "Operating cash flow asymmetric timeliness in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 587-627, April.
    24. Kuo Chuen, David LEE & Teo, Ernie G.S., 2015. "Emergence of FinTech and the LASIC principles," Journal of Financial Perspectives, EY Global FS Institute, vol. 3(3), pages 24-36.
    25. Yue Ma & De Liu, 2017. "Introduction to the special issue on Crowdfunding and FinTech," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-4, December.
    26. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Journal of Business Ethics, Springer, vol. 148(3), pages 647-671, March.
    27. Fengyan Wang & Ziyuan Sun, 2022. "Does the Environmental Regulation Intensity and ESG Performance Have a Substitution Effect on the Impact of Enterprise Green Innovation: Evidence from China," IJERPH, MDPI, vol. 19(14), pages 1-24, July.
    28. Zhai, Huayun & Lu, Meiting & Shan, Yaowen & Liu, Qingzhuo & Zhao, Ying, 2021. "Key audit matters and stock price synchronicity: Evidence from a quasi-natural experiment in China," International Review of Financial Analysis, Elsevier, vol. 75(C).
    29. Amir Sufi, 2007. "Information Asymmetry and Financing Arrangements: Evidence from Syndicated Loans," Journal of Finance, American Finance Association, vol. 62(2), pages 629-668, April.
    30. Mohammed Benlemlih & Mohammad Bitar, 2018. "Corporate Social Responsibility and Investment Efficiency," Post-Print halshs-01321227, HAL.
    31. Yuqiang Cao & Zhuoan Feng & Meiting Lu & Yaowen Shan, 2021. "Tax avoidance and firm risk: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4967-5000, September.
    32. Michael Kend & Lan Anh Nguyen, 2020. "Big Data Analytics and Other Emerging Technologies: The Impact on the Australian Audit and Assurance Profession," Australian Accounting Review, CPA Australia, vol. 30(4), pages 269-282, December.
    33. Xin Wang & Haiyan Jiang & Meiting Lu, 2019. "Does the Reporting Location of Other Comprehensive Income Matter? The Investor's Perspective," Australian Accounting Review, CPA Australia, vol. 29(3), pages 546-555, September.
    34. Edmans, Alex, 2011. "Does the stock market fully value intangibles? Employee satisfaction and equity prices," Journal of Financial Economics, Elsevier, vol. 101(3), pages 621-640, September.
    35. Wei Jiang & Meiting Lu & Yaowen Shan & Tingting Zhu, 2016. "Evidence of Avoiding Working Capital Deficits in Australia," Australian Accounting Review, CPA Australia, vol. 26(1), pages 107-118, March.
    36. Favara, Giovanni & Ivanov, Ivan & Rezende, Marcelo, 2021. "GSIB surcharges and bank lending: Evidence from US corporate loan data," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1426-1443.
    37. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    38. Ailian Zhang & Shuyao Wang & Bai Liu & Pei Liu, 2022. "How fintech impacts pre‐ and post‐loan risk in Chinese commercial banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2514-2529, April.
    39. Avramov, Doron & Cheng, Si & Lioui, Abraham & Tarelli, Andrea, 2022. "Sustainable investing with ESG rating uncertainty," Journal of Financial Economics, Elsevier, vol. 145(2), pages 642-664.
    40. Anup Kumar Saha & Habiba Al‐Shaer & Rob Dixon & Istemi Demirag, 2021. "Determinants of Carbon Emission Disclosures and UN Sustainable Development Goals: The Case of UK Higher Education Institutions," Australian Accounting Review, CPA Australia, vol. 31(2), pages 79-107, June.
    41. Wu, Yilin & Huang, Shilei, 2022. "The effects of digital finance and financial constraint on financial performance: Firm-level evidence from China's new energy enterprises," Energy Economics, Elsevier, vol. 112(C).
    42. Yu, Hongxin & Zhao, Yuanjun & Liu, Zheng & Liu, Wei & Zhang, Shuai & Wang, Fatao & Shi, Lihua, 2021. "Research on the financing income of supply chains based on an E-commerce platform," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    43. Jaime F. Lavin & Alejandro A. Montecinos-Pearce, 2021. "ESG Reporting: Empirical Analysis of the Influence of Board Heterogeneity from an Emerging Market," Sustainability, MDPI, vol. 13(6), pages 1-25, March.
    44. Qian Wang & Jinbao Yang & Yung‐ho Chiu & Tai‐Yu Lin, 2020. "The impact of digital finance on financial efficiency," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(7), pages 1225-1236, October.
    45. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
    46. Liu, Jiajia & Li, Xuerong & Wang, Shouyang, 2020. "What have we learnt from 10 years of fintech research? a scientometric analysis," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    47. Shiyu Wu & Xinyi Li & Xiaosen Du & Zexin Li, 2022. "The Impact of ESG Performance on Firm Value: The Moderating Role of Ownership Structure," Sustainability, MDPI, vol. 14(21), pages 1-22, November.
    48. Timothy W. Luke, 2022. "Investment and Rapid Climate Change as Biopolitics: Foucault and Governance of the Self and Others through ESG," Sustainability, MDPI, vol. 14(22), pages 1-11, November.
    49. Van Ha Nguyen & Frank W. Agbola & Bobae Choi, 2022. "Does Corporate Social Responsibility Enhance Financial Performance? Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 32(1), pages 5-18, March.
    50. Eliwa, Yasser & Aboud, Ahmed & Saleh, Ahmed, 2021. "ESG practices and the cost of debt: Evidence from EU countries," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 79(C).
    51. Yang, Chenlin & Xia, Xinping & Li, Yuguo & Zhao, Yufang & Liu, Shuang, 2021. "CEO financial career and corporate innovation: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 81-102.
    52. Aaron K. Chatterji & Rodolphe Durand & David I. Levine & Samuel Touboul, 2016. "Do ratings of firms converge? Implications for managers, investors and strategy researchers," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1597-1614, August.
    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. Marta Szczepańczyk & Paweł Nowodziński & Adam Sikorski, 2023. "ESG Strategy and Financial Aspects Using the Example of an Oil and Gas Midstream Company: The UNIMOT Group," Sustainability, MDPI, vol. 15(18), pages 1-24, September.
    2. Olesya P. Kazachenok & Galina V. Stankevich & Natalia N. Chubaeva & Yuliya G. Tyurina, 2023. "Economic and legal approaches to the humanization of FinTech in the economy of artificial intelligence through the integration of blockchain into ESG Finance," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    3. Mertzanis, Charilaos, 2023. "FinTech finance and social-environmental performance around the world," Finance Research Letters, Elsevier, vol. 56(C).
    4. Liyuan Meng & Yuchen Zhang, 2023. "Impact of Tax Administration on ESG Performance—A Quasi-Natural Experiment Based on China’s Golden Tax Project III," Sustainability, MDPI, vol. 15(14), pages 1-23, July.
    5. Yunfu Zhu & Haoling Yang & Ma Zhong, 2023. "Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings," Sustainability, MDPI, vol. 15(16), pages 1-17, August.

    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. Xijia Huang & Yiting Guo & Yuming Lin & Liping Liu & Kai Yan, 2022. "Green Loans and Green Innovations: Evidence from China’s Equator Principles Banks," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    2. Cao, Yuqiang & Li, Chenglin & Liu, Xinghe & Lu, Meiting & Shan, Yaowen, 2022. "Economic policy uncertainty and debt allocation within business groups," Economic Modelling, Elsevier, vol. 116(C).
    3. Yuqiang Cao & Weiming Liang & Guocheng Yang & Jun Yin, 2022. "Judicial Independence and Domestic Supply Chain: Evidence from a Quasi-Natural Experiment," Sustainability, MDPI, vol. 14(24), pages 1-17, December.
    4. Shuxia Zhang & Xiangyang Yin & Liping Xu & Ziyu Li & Deyue Kong, 2022. "Effect of Environmental, Social, and Governance Performance on Corporate Financialization: Evidence from China," Sustainability, MDPI, vol. 14(17), pages 1-20, August.
    5. Guo, Junyan & Fang, Hanqing & Liu, Xuexin & Wang, Cizhi & Wang, Yuan, 2023. "FinTech and financing constraints of enterprises: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    6. Qinglan Wu & Guifu Chen & Jing Han & Liyan Wu, 2022. "Does Corporate ESG Performance Improve Export Intensity? Evidence from Chinese Listed Firms," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    7. Can Huang & Yuqiang Cao & Meiting Lu & Yaowen Shan & Yizhou Zhang, 2023. "Messages in online stock forums and stock price synchronicity: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3011-3041, September.
    8. Hong, Liu & Nikbakht, Ehsan & Zhou, Tianpeng, 2023. "Does product market competition affect the adoption of FinTech by non-financial firms?," Finance Research Letters, Elsevier, vol. 54(C).
    9. Chen, Jing & Liu, Xinghe & Ou, Fenghao & Lu, Meiting & Wang, Peipei, 2023. "Green lending and stock price crash risk: Evidence from the green credit reform in China," Journal of International Money and Finance, Elsevier, vol. 130(C).
    10. Azmi, Wajahat & Hassan, M. Kabir & Houston, Reza & Karim, Mohammad Sydul, 2021. "ESG activities and banking performance: International evidence from emerging economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 70(C).
    11. Heying Liu & Chan Lyu, 2022. "Can ESG Ratings Stimulate Corporate Green Innovation? Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-20, September.
    12. 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.
    13. Xiuli Sun & Cui Zhou & Zhuojiong Gan, 2023. "Green Finance Policy and ESG Performance: Evidence from Chinese Manufacturing Firms," Sustainability, MDPI, vol. 15(8), pages 1-27, April.
    14. Ozgur Ozdemir & Fatemeh Binesh & Ezgi Erkmen, 2022. "The effect of target’s CSR performance on M&A deal premiums: a case for service firms," Review of Managerial Science, Springer, vol. 16(4), pages 1001-1034, May.
    15. Campanella, Francesco & Serino, Luana & Battisti, Enrico & Giakoumelou, Anastasia & Karasamani, Isabella, 2023. "FinTech in the financial system: Towards a capital-intensive and high competence human capital reality?," Journal of Business Research, Elsevier, vol. 155(PA).
    16. Maoli Ji & Yuguang Ji & Shulan Dong, 2022. "Environmental Accounting Information Disclosure Driving Factors: The Case of Listed Firms in China," Sustainability, MDPI, vol. 14(23), pages 1-23, November.
    17. Marzhan Beisenbina & Laura Fabregat‐Aibar & Maria‐Glòria Barberà‐Mariné & Maria‐Teresa Sorrosal‐Forradellas, 2023. "The burgeoning field of sustainable investment: Past, present and future," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 649-667, April.
    18. V. Veeravel & E. K. S. Sadharma & Bandi Kamaiah, 2024. "Do ESG disclosures lead to superior firm performance? A method of moments panel quantile regression approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 741-754, January.
    19. Ren, Xiaohang & Zeng, Gudian & Zhao, Yang, 2023. "Digital finance and corporate ESG performance: Empirical evidence from listed companies in China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    20. Yu, Haixu & Liang, Chuanyu & Liu, Zhaohua & Wang, He, 2023. "News-based ESG sentiment and stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 88(C).

    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:gam:jsusta:v:14:y:2022:i:24:p:16597-:d:1000167. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.