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Can executive incentives improve corporate ESG performance? Evidence from Chinese listed companies

Author

Listed:
  • Ma Deshui

    (Zhengzhou University of Aeronautics)

  • Wang Guohua

    (Zhengzhou University of Aeronautics)

  • Ahsan Akbar

    (Guangzhou City University of Technology, University of Hradec Kralove)

  • Muhammad Usman

    (University of Education Lahore)

  • Marcela Sokolova

    (University of Hradec Kralove)

Abstract

This paper examined the driving factors of ESG performance in Chinese listed companies from the perspective of executive motivation and found that: (1) monetary compensation incentives and equity incentives exert a sizeable impact on enhancing corporate ESG performance, and the robustness test results remain unchanged; (2) corporate strategic change and green technology innovation play a mediating role in executive motivation and corporate ESG; (3) the promotion effect of executive monetary compensation incentives on ESG performance is more significant in state-owned enterprises and heavily polluting entities, while the impact of executives’ equity incentives on ESG performance is suppressed in state-owned enterprises; and (4) the economic effect test shows that good ESG performance has a positive economic influence of reducing a firms’ litigation risk and idiosyncratic risk. This paper provides empirical evidence for Chinese listed companies to improve ESG performance.

Suggested Citation

  • Ma Deshui & Wang Guohua & Ahsan Akbar & Muhammad Usman & Marcela Sokolova, 2024. "Can executive incentives improve corporate ESG performance? Evidence from Chinese listed companies," E&M Economics and Management, Technical University of Liberec, Faculty of Economics, vol. 27(4), pages 135-150, December.
    • Handle: RePEc:bbl:journl:v:27:y:2024:i:4:p:135-150
    DOI: 10.15240/tul/001/2024-4-009
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    More about this item

    Keywords

    Monetary compensation incentives; equity incentives; ESG; corporate strategic change; green technological innovation;
    All these keywords.

    JEL classification:

    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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