The impact of ESG performance on corporate risk-taking: empirical evidence from China

ABSTRACT

Using China’s A-share listed companies from 2011 to 2021 as a research sample, the study analyzes and empirically examines the impact of ESG performance on corporate risk-taking. The results show that ESG performance has a negative association with risk-taking, which is consistent with the ‘stress hypothesis’. Mechanism tests show that ESG performance dampens risk-taking by increasing corporate transparency. Both top management team stability and institutional ownership negatively moderate the inhibitory effect of ESG performance on corporate risk-taking. Further analysis reveals that the inhibitory effect of ESG performance on corporate risk-taking is more prominent in non-state enterprises and financialized enterprises.

KEYWORDS:

• ESG performance
• corporate risk-taking
• corporate transparency
• financialization
• top management team stability
• institutional ownership

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Jiangxi Provincial Department of Education under [grant number GJJ2200667] and Jiangxi Social Science Planning Office under [grant number 23YJ29].