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Impact and mechanism analysis of ESG ratings on the efficiency of green technology innovation

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  • Zhou, Yacheng
  • Huo, Weidong
  • Bo, Lan
  • Chen, Xiaoxian

Abstract

This study examines how environmental, social, and governance (ESG) ratings affect the efficiency of green technology innovation using listed Chinese companies as a research sample. The results suggest that a higher ESG rating is beneficial for boosting the efficiency of corporate green technology innovation. The mechanism analysis reveals that the impact can be achieved by relaxing financial constraints and encouraging companies to take more risks. Moreover, heterogeneity analysis demonstrates that the impact of ESG ratings on green technology innovation varies significantly across industries. The findings shed light on how to maximize the impact of ESG ratings on green technology innovation efficiency.

Suggested Citation

  • Zhou, Yacheng & Huo, Weidong & Bo, Lan & Chen, Xiaoxian, 2023. "Impact and mechanism analysis of ESG ratings on the efficiency of green technology innovation," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009637
    DOI: 10.1016/j.frl.2023.104591
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    Cited by:

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    4. Wang, Miao & Wang, Yiduo & Wen, Shouxun, 2024. "ESG performance and green innovation in new energy enterprises: Does institutional environment matter?," Research in International Business and Finance, Elsevier, vol. 71(C).

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    More about this item

    Keywords

    ESG ratings; The efficiency of green technology innovation; Mechanism analysis; Financing constraints; Risk taking;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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