A more sustainable future: Can politically connected CEOs spur the nexus between ESG performance and firm financial performance?

IF 5.4 2区经济学 Q1 BUSINESS, FINANCE

Journal of International Financial Markets Institutions & Money Pub Date : 2024-09-05 DOI:10.1016/j.intfin.2024.102056

Mohamed Marie , Baolei Qi , Mohammed Elgammal , Marwa Elnahass

{"title":"A more sustainable future: Can politically connected CEOs spur the nexus between ESG performance and firm financial performance?","authors":"Mohamed Marie , Baolei Qi , Mohammed Elgammal , Marwa Elnahass","doi":"10.1016/j.intfin.2024.102056","DOIUrl":null,"url":null,"abstract":"<div><p>This study examines how politically connected CEOs moderate the relationship between ESG and financial performance in Chinese A-share listed companies from 2015 to 2022. The results demonstrate that companies with strong ESG performance tend to have better financial performance. The connection between ESG performance and financial performance is influenced by the political ties of the CEO. Specifically, companies led by highly politically connected CEOs exhibit a weaker link between ESG practices and financial performance when compared with less politically affiliated firms. Our heterogeneity tests demonstrate that companies with low technology and cross-listing, along with companies audited by firms outside the Big 4 and led by highly politically connected CEOs, show a more significant impact of ESG practices on their financial performance compared to those with fewer political connections. Further examination reveals that political connections exacerbate the adverse effect of the environmental aspect on financial performance. This study contributes to the ongoing discussions surrounding ESG issues, especially in the context of Net-Zero and climate change actions following the international Climate Change Conferences (COPs). Overall, this study contributes valuable insights and policy implications into the multifaceted dynamics of ESG factors and their impact on corporate financial decisions.</p></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"96 ","pages":"Article 102056"},"PeriodicalIF":5.4000,"publicationDate":"2024-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S1042443124001227/pdfft?md5=7f6e8b52d605dea28815c39627dd1995&pid=1-s2.0-S1042443124001227-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Financial Markets Institutions & Money","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042443124001227","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

This study examines how politically connected CEOs moderate the relationship between ESG and financial performance in Chinese A-share listed companies from 2015 to 2022. The results demonstrate that companies with strong ESG performance tend to have better financial performance. The connection between ESG performance and financial performance is influenced by the political ties of the CEO. Specifically, companies led by highly politically connected CEOs exhibit a weaker link between ESG practices and financial performance when compared with less politically affiliated firms. Our heterogeneity tests demonstrate that companies with low technology and cross-listing, along with companies audited by firms outside the Big 4 and led by highly politically connected CEOs, show a more significant impact of ESG practices on their financial performance compared to those with fewer political connections. Further examination reveals that political connections exacerbate the adverse effect of the environmental aspect on financial performance. This study contributes to the ongoing discussions surrounding ESG issues, especially in the context of Net-Zero and climate change actions following the international Climate Change Conferences (COPs). Overall, this study contributes valuable insights and policy implications into the multifaceted dynamics of ESG factors and their impact on corporate financial decisions.

查看原文本刊更多论文

更可持续的未来：与政治有关联的首席执行官能否促进环境、社会和公司治理绩效与公司财务绩效之间的联系？

本研究探讨了在 2015 年至 2022 年期间，与政治有关联的首席执行官如何调节中国 A 股上市公司的环境、社会和公司治理与财务绩效之间的关系。研究结果表明，ESG表现优异的公司往往拥有更好的财务表现。CEO的政治关系会影响ESG绩效与财务绩效之间的关系。具体来说，与政治关系较少的公司相比，政治关系密切的首席执行官领导的公司在环境、社会和公司治理实践与财务业绩之间的联系较弱。我们的异质性检验表明，与政治关系较少的公司相比，技术含量低和交叉上市的公司，以及由四大之外的公司审计和由政治关系密切的首席执行官领导的公司，ESG实践对其财务业绩的影响更为显著。进一步研究发现，政治关系加剧了环境方面对财务业绩的不利影响。本研究为目前围绕环境、社会和公司治理问题的讨论做出了贡献，尤其是在国际气候变化大会（COPs）之后的零净排放和气候变化行动背景下。总之，本研究对环境、社会和治理因素的多方面动态及其对企业财务决策的影响提出了宝贵的见解和政策影响。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of International Financial Markets Institutions & Money Multiple-

CiteScore

6.60

自引率

10.00%

发文量

142

期刊介绍： International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.