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Equity incentives and ESG performance: Evidence from China

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  • Zeng, Yongliang
  • Zhao, Xiangfang
  • Zhu, Yiwen

Abstract

Using Chinese A-share listed firms from 2006 to 2021, we investigate the impact of executive equity incentive plans (EEIPs) on corporate environmental, social, and governance (ESG) performance. We find that EEIPs positively affect ESG performance. We also find that options have a stronger incentive effect on ESG performance than restricted stock, and longer valid period and higher vesting targets can enhance the incentive effect of EEIPs on ESG performance. Moreover, the positive impact of EEIPs on ESG performance is stronger for non-SOEs and firms with better external governance.

Suggested Citation

  • Zeng, Yongliang & Zhao, Xiangfang & Zhu, Yiwen, 2023. "Equity incentives and ESG performance: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323009649
    DOI: 10.1016/j.frl.2023.104592
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    More about this item

    Keywords

    ESG performance; Executive equity incentive plans; Sustainable development;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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