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The Spillover Effect of ESG Performance on Green Innovation—Evidence from Listed Companies in China A-Shares

Author

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  • Hui-Lin Zhu

    (Beijing Technology and Business University, Beijing 100048, China)

  • Ke-Zhi Yang

    (Beijing Technology and Business University, Beijing 100048, China)

Abstract

This research paper examines the spillover effect of ESG performance on green innovation behavior in companies within the same industry. The study specifically focuses on listed companies on the Shanghai Stock Exchange and Shenzhen Stock Exchange between 2011 and 2020. The results indicate that peer firms with superior environmental, social, and governance (ESG) performance have a notable and beneficial impact on the green innovation activities, quantities, and qualities of their counterparts. Significantly, this phenomenon is especially evident for the ecological (E) and societal (S) aspects of ESG performance when considering companies within the same industry. Additionally, according to our analysis, the association between peer firms’ improved ESG performance and subsequent gains in green innovation activities is mediated by higher R&D expenditure and increased green consciousness. The robustness of these findings persists even after resolving issues of endogeneity through thorough testing. In addition, this paper finds that the spillover effects are more significant for non-state-owned firms, small-sized firms, firms with more analyst attention, firms in non-highly polluting industries, and when external environmental regulations are stronger.

Suggested Citation

  • Hui-Lin Zhu & Ke-Zhi Yang, 2024. "The Spillover Effect of ESG Performance on Green Innovation—Evidence from Listed Companies in China A-Shares," Sustainability, MDPI, vol. 16(8), pages 1-31, April.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:8:p:3238-:d:1374782
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    References listed on IDEAS

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    Cited by:

    1. Pang, Yuhui & Guo, Rongjun & Zhao, Yuhao & Dong, Liang, 2025. "Exploring the impact of traditional cultural intensity and patient capital on sustainable green innovation in listed companies: A mediation and heterogeneity analysis," International Review of Economics & Finance, Elsevier, vol. 103(C).
    2. Sun, Xian & Xiong, Xiaoyan, 2025. "ESG performance and corporate innovation," Research in International Business and Finance, Elsevier, vol. 76(C).

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