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Abstract
ESG performance measures the long-term sustainability of a company's development, whereas managerial short-termism cause companies to overly prioritize short-term profits at the expense of neglecting sustainable development. This study on Chinese listed companies from 2009 to 2021 examines the impact of managerial short-termism on corporate ESG performance. We found that managerial short-termism significantly inhibits corporate ESG performance. Furthermore, using text mining of internal and external sentiment data, our findings suggest that companies exhibiting negative sentiment in their annual reports and financial news reports are more susceptible to the detrimental impact of managerial short-termism on corporate ESG performance. In addition, the mechanism analyzes show that managerial short-termism affects corporate ESG performance by lowering R&D investment, reducing the internal ESG attention, declining investor sentiment and increasing financing constraints. The research results revealed that companies managing for the future can better reduce their risk in long-term development.
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No potential conflict of interest was reported by the author(s).
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Notes on contributors
Guoying Deng
Professor Guoying Deng is a distinguished economist holding a Ph.D. in Economics. He serves as the Chief Expert for China's National Social Science Major Projects and holds the position of Vice Dean at Sichuan University's School of Economics. He is also the associate editor-in-chief of The European Journal of Finance (SSCI, ABS 3-star journal) and an editorial board member of China Real Estate Finance Journal. Prof. Deng's academic impact is evident through his publication of nearly 60 papers in esteemed academic journals, including the Journal of Urban Economics, Environmental and Resource Economics, China Economic Review, The European Journal of Finance, and Journal of Housing Economics.
Hanying Liu
Hanying Liu is a student at the School of Economics of Sichuan University. Her research primarily focuses on green finance, sustainable development, and corporate finance. As a research assistant, she has contributed to one national-level and three provincial-level research projects. She has one paper under external review and two working papers, all concentrated on green finance. Papers she co-authored (as the second author) have been selected for the prestigious “2023 INTERNATIONAL CONFERENCE ON CLIMATE AND ENERGY FINANCE (ICEF 2023)” and have won the “Best Paper Award”.
Jingzhou Yan
Dr. Jingzhou Yan is an Assistant Professor at Sichuan University with a diverse academic background, holding a Ph.D. degree in Statistics from Shanghai University of Finance and Economics and undertaking the post-doctoral program in Economics. He also accomplished the Joint PHD Training Program at North Carolina State University. Dr. Yan's academic interests focus on finance, specifically on uncertainty, sustainable finance, Corporate finance, and continuous-time macro-finance. He has published 20 valuable research papers in esteemed academic journals such as Economic Modeling, Quantitative Finance and Accounting Review, Pacific Basin Journal of Finance, Financial Innovation, Financial Research Letters, and Economics Letters.
Shibo Ma
Shibo Ma is a student at the School of Economics at Sichuan University. His research interests include financial risk and green finance. He has won honors such as National Scholarship and Tianjin Outstanding Student. He has published many papers in internationally renowned journals such as Finance Research Letters. His papers have been selected into important academic conferences such as “2023 INTERNATIONAL CONFERENCE ON CLIMATE AND ENERGY FINANCE (ICEF 2023)” for many times and won the “BEST PAPER AWARD” award at the international academic conference (ICEF 2023).