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ESG in China: Value Creation or Cost Imposition? An Empirical Study of the A-share Market

Author(s)

Junqi Yang

Affiliation(s)

City University of Macau, Maoming, Guangdong, China

Abstract

This research investigates how Environmental, Social, and Governance initiatives affect company performance in China’s A-share market. Using a fixed-effects model to analyze panel data from 2009 to 2023, the research examines the connection between ESG performance and financial outcomes.Findings reveal a positive linkage where enhanced ESG implementation correlates with improved operational efficiency and market valuation, particularly in industries with stringent regulatory oversight. However, the financial burden of ESG adoption becomes evident in sectors characterized by high capital intensity and low-profit margins. The study further identifies corporate governance quality and regional institutional development as critical moderators affecting ESG effectiveness. Contrary to conventional assumptions, state-owned enterprises demonstrate weaker ESG-driven value creation compared to private firms. These insights suggest that ESG integration in emerging markets operates through context-dependent mechanisms, requiring coordinated efforts between regulatory frameworks and corporate strategic alignment to optimize sustainable growth outcomes.

Keywords

ESG Performance; Financial Performance; Corporate Governance; A-Share Market; Empirical Analysis; China, Sustainability; Industry Differences

References

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