Government Subsidies and Environmental, Social, and Governance (ESG) Performance: Evidence from China
DOI:
https://doi.org/10.62051/ijgem.v4n3.12Keywords:
ESG, Government subsidies, U-shaped, Financing constraints, Green innovation, Political connectionsAbstract
The challenges of climate change and pollution are driving more companies to focus on environmental, social and governance (ESG). It is possible to evaluate the implications of current subsidy policies and provide suggestions for novel approaches by comprehending the connection between government subsidies and ESG. In this paper, we constructed a panel database of Chinese A-share listed companies from 2010-2021, including government subsidies received by companies, ESG scores and other basic information and data. In addition, we explored the correlation between government subsidies and ESG and examined the moderating effects of financial constraints, green innovation and political connections. We find a U-shaped relationship between government subsidies and ESG for all our research samples. Besides, financing constraints, green innovation and political connections all negatively moderate the U-shaped relationship between government subsidies and ESG. Moreover, compared to firms with green behaviors, firms without green behaviors show more significant dampening and promoting effects between government subsidies and ESG.
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