“Sticking to One's Post” or “Backing the Right Captain”?—The Impact of Corporate Environmental, Social, and Governance Performance on Employee Turnover

Do employees respond to a firm's environmental, social, and governance (ESG) performance? This study examines the relationship between corporate ESG performance and employee turnover, employing social identity theory and rational action theory. Using data from Chinese A‐share nonfinancial listed firms over the period from 2011 to 2020, the results reveal a positive U‐shaped relationship. Specifically, moderate levels of ESG performance are associated with reduced employee turnover. And this relationship is more pronounced in the environmental and social pillars. Further analysis shows that employees at high‐performing firms are more concerned with ESG performance, and those with high environmental awareness exhibit greater sensitivity to it. Information asymmetry may mediate the relationship between corporate ESG performance and employee turnover. These results contribute valuable insights into the broader implications of ESG performance for employee turnover, clarify the underlying mechanisms, and offer practical guidance for refining corporate ESG strategies.