The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
This study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we e...
Saved in:
| Main Authors: | , , , , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-01-01
|
| Series: | Social Sciences and Humanities Open |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2590291125000506 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1825206890435444736 |
|---|---|
| author | Zhao Donghui Wan Sallha Yusoff Mohd Fairuz Md Salleh Ngan Sue Lin Ainul Huda Jamil Mohd Juraij Abd Rani Mohd Shahidan Shaari |
| author_facet | Zhao Donghui Wan Sallha Yusoff Mohd Fairuz Md Salleh Ngan Sue Lin Ainul Huda Jamil Mohd Juraij Abd Rani Mohd Shahidan Shaari |
| author_sort | Zhao Donghui |
| collection | DOAJ |
| description | This study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we explore how ESG influences investment efficiency through the mediating roles of agency costs and financial constraints. Findings reveal that high ESG performance reduces agency costs and eases financial constraints, enhancing investment efficiency. Additionally, we assess the moderating effect of China's institutional environment, characterized by four indicators: marketization, financial development, government intervention, and regulatory quality. Results show that ESG's positive impact on investment efficiency is stronger in regions with more robust institutional frameworks. This study underscores the importance of adapting ESG strategies to varied institutional contexts, offering valuable insights for policymakers and corporate leaders seeking to promote sustainable growth across diverse regions. |
| format | Article |
| id | doaj-art-9ea56d4d9aea433c82b079a7e3d91ece |
| institution | Kabale University |
| issn | 2590-2911 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Social Sciences and Humanities Open |
| spelling | doaj-art-9ea56d4d9aea433c82b079a7e3d91ece2025-02-07T04:48:16ZengElsevierSocial Sciences and Humanities Open2590-29112025-01-0111101323The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraintsZhao Donghui0Wan Sallha Yusoff1Mohd Fairuz Md Salleh2Ngan Sue Lin3Ainul Huda Jamil4Mohd Juraij Abd Rani5Mohd Shahidan Shaari6UKM-GSB, The National University of Malaysia, UKM Bangi, 43600, Selangor, MalaysiaCentre of Excellence Social Innovation and Sustainability, Faculty of Business & Communication, University Malaysia Perlis, Pauh Putra Campus, 02600, Kangar, Perlis, Malaysia; Corresponding author.UKM-GSB, The National University of Malaysia, UKM Bangi, 43600, Selangor, Malaysia; Corresponding author.UKM-GSB, The National University of Malaysia, UKM Bangi, 43600, Selangor, MalaysiaUKM-GSB, The National University of Malaysia, UKM Bangi, 43600, Selangor, MalaysiaCentre of Excellence Social Innovation and Sustainability, Faculty of Business & Communication, University Malaysia Perlis, Pauh Putra Campus, 02600, Kangar, Perlis, MalaysiaFaculty of Economics and Business, Universiti Malaysia Sarawak, 94300, Kota Samarahan, Sarawak, MalaysiaThis study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we explore how ESG influences investment efficiency through the mediating roles of agency costs and financial constraints. Findings reveal that high ESG performance reduces agency costs and eases financial constraints, enhancing investment efficiency. Additionally, we assess the moderating effect of China's institutional environment, characterized by four indicators: marketization, financial development, government intervention, and regulatory quality. Results show that ESG's positive impact on investment efficiency is stronger in regions with more robust institutional frameworks. This study underscores the importance of adapting ESG strategies to varied institutional contexts, offering valuable insights for policymakers and corporate leaders seeking to promote sustainable growth across diverse regions.http://www.sciencedirect.com/science/article/pii/S2590291125000506ESG performanceInvestment efficiencyInstitutional environmentAgency costsFinancial constraints |
| spellingShingle | Zhao Donghui Wan Sallha Yusoff Mohd Fairuz Md Salleh Ngan Sue Lin Ainul Huda Jamil Mohd Juraij Abd Rani Mohd Shahidan Shaari The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints Social Sciences and Humanities Open ESG performance Investment efficiency Institutional environment Agency costs Financial constraints |
| title | The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints |
| title_full | The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints |
| title_fullStr | The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints |
| title_full_unstemmed | The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints |
| title_short | The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints |
| title_sort | impact of esg and the institutional environment on investment efficiency in china through the mediators of agency costs and financial constraints |
| topic | ESG performance Investment efficiency Institutional environment Agency costs Financial constraints |
| url | http://www.sciencedirect.com/science/article/pii/S2590291125000506 |
| work_keys_str_mv | AT zhaodonghui theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT wansallhayusoff theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdfairuzmdsalleh theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT ngansuelin theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT ainulhudajamil theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdjuraijabdrani theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdshahidanshaari theimpactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT zhaodonghui impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT wansallhayusoff impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdfairuzmdsalleh impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT ngansuelin impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT ainulhudajamil impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdjuraijabdrani impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints AT mohdshahidanshaari impactofesgandtheinstitutionalenvironmentoninvestmentefficiencyinchinathroughthemediatorsofagencycostsandfinancialconstraints |