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Evaluating the Impact of ESG Ratings on Financial Performance: The Role of Corporate Youthfulness and Green Innovation in Chinese A-share Markets

In: Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025)

Author

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  • Fengwen Zhang

    (Western Michigan Institute, GuiZhou University of Finance and Economics & Western Michigan University)

Abstract

The Environmental, Social, and Governance (ESG) rating framework serves as a crucial tool for assessing a corporation’s commitment to sustainable development. It encourages organizations to incorporate environmental, social, and governance considerations into their operations, thereby advancing responsible and sustainable growth strategies. ESG ratings have gained prominence as key indicators in evaluating corporate performance within the global investment arena, particularly amid the heightened global focus on sustainable development and corporate social responsibility. This study employs the ESG rating data of Huazheng Securities to systematically analyze the impact of ESG performance on financial outcomes, utilizing a dataset comprising non-financial enterprises listed on the Shanghai, Shenzhen, and Beijing A-share markets from 2012 to 2022. Furthermore, the research investigates the moderating effects of corporate age and green innovation on this relationship. Findings indicate a positive correlation between elevated ESG scores and improved financial performance. Additionally, the analysis reveals that the relative youth of an enterprise positively moderates the ESG-performance nexus, whereas green innovation exhibits a negative moderating influence. This research offers insightful guidance for developing countries striving to foster sustainable economic growth and enhance the global competitiveness of their enterprises.

Suggested Citation

  • Fengwen Zhang, 2025. "Evaluating the Impact of ESG Ratings on Financial Performance: The Role of Corporate Youthfulness and Green Innovation in Chinese A-share Markets," Advances in Economics, Business and Management Research, in: Maizaitulaidawati Md Husin & Tomoki Fujii & Xiaodong Lai & Azlina Binti Md Yassin (ed.), Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), pages 232-242, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-702-1_25
    DOI: 10.2991/978-94-6463-702-1_25
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