Corporate ESG Performance and Financing Constraints: Empirical Evidence from Chinese Listed Companies

Abstract

In recent years, corporate ESG performance has received extensive attention from academic and practical circles around the world. This paper examines the impact of corporate ESG performance on financing constraints based on data from 2012-2019 Chinese A-share listed companies. The findings show that corporate ESG performance can mitigate corporate financing constraints. The results remain robust after using the new Environmental Protection Law, a quasi-natural experiment, with the difference-in-difference model to mitigate endogeneity. The mechanism test shows that ESG performance can mitigate corporate financing constraints by attracting more analyst attention to mitigate information asymmetry and obtaining more commercial credit. Heterogeneity analysis shows that corporate ESG performance has a more pronounced effect on alleviating financing constraints for non-state and high-tech firms.