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The impact of local debt management on corporate ESG Performance: A quasi-natural experiment based on the new budget law

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  • Wei, Ming
  • Xu, Xingui

Abstract

This study focuses on the impact of China's local debt management, following the implementation of the new Budget Law in 2015, on the Environmental, Social, and Governance (ESG) performance of A-share listed companies between 2010 and 2021. The research reveals that effective management of local government debt under the new Budget Law significantly enhances corporate ESG performance. Further mediation analysis shows that the enforcement of the new Budget Law reduces corporate financial expense ratios, thereby indirectly boosting ESG performance. Additionally, the new Budget Law has a more pronounced effect on improving the ESG performance of private enterprises, with limited impact on state-owned enterprises.

Suggested Citation

  • Wei, Ming & Xu, Xingui, 2025. "The impact of local debt management on corporate ESG Performance: A quasi-natural experiment based on the new budget law," Finance Research Letters, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017458
    DOI: 10.1016/j.frl.2024.106716
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