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Does the inclusion of Chinese A-shares in the MSCI EM index promote ESG performance?

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  • Li, Ping
  • Wang, Kai
  • Zhang, Junping

Abstract

This paper explores how the inclusion of Chinese A-shares in the MSCI Emerging Markets (EM) index affects firms’ ESG performance. Making use of staggered inclusion, we construct a difference-in-differences model. We find that the inclusion of A-shares has a positive effect on ESG performance. A series of additional tests indicate that the effect appears causal. Further mechanism analysis suggests that external supervision and green innovation are the main plausible underlying economic mechanisms. Our paper sheds new light on the disputes of capital market internationalization and enriches the literature about the determinants of ESG performance, offering important implications for regulators.

Suggested Citation

  • Li, Ping & Wang, Kai & Zhang, Junping, 2023. "Does the inclusion of Chinese A-shares in the MSCI EM index promote ESG performance?," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323008164
    DOI: 10.1016/j.frl.2023.104444
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    References listed on IDEAS

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    More about this item

    Keywords

    MSCI emerging markets index; Chinese A-shares; ESG performance; Capital market internationalization;
    All these keywords.

    JEL classification:

    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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