Work

Effect of firm social status on ESG performance: Theoretical mechanism and heterogeneity analysis

Year: 2025

Type: article

Abstract: Firm social status affects decision-making and external stakeholders' evaluation, which affects ESG performance. Drawing upon the perspective of firm social attributes, we empirically examine the effect of firm social status on ESG performance and the mechanism. Our sample comprises Chinese-listed firms in Shanghai and Shenzhen A-shares. Our findings indicate that firms with high social status can significantly improve ESG performance. Both media coverage and high-speed rail lines positively moderate the relationship between firm social status and ESG performance. The test for mediated effects reveals that firm social status promotes firms' ESG performance by reducing financing constraints and increasing information transparency. Using Heckman's two-stage model and propensity score matching to address the endogeneity concern and robustness testing by changing data sources and alternative measures for variables, the positive effect of firm social status on ESG performance still holds. The heterogeneity analysis shows that the effect of firm social status on ESG performance is more pronounced for low independent directors' share firms, non-state-owned enterprises (non-SOEs), low environmental attention firms, non-heavily polluting firms, and competitive industry firms. We further demonstrate that ESG performance mediates the relationship between firm social status and innovation.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2025.104062

Authors: Liuyang Xue, Shiyao Jiang, Nanxuan Wu, Meng Yin

Institutions: Tsinghua University, Lanzhou University of Finance and Economics, University of International Business and Economics, Inspur (China)

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,930