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Online search attention, firms’ ESG and operating performance

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  • Zhao, Xuezhou
  • Fang, Libing
  • Zhang, Ke

Abstract

The online search volume reflects public attention related to people's concerns. Environmental, Social and Governance issues (ESG) has been well documented to be a good means of serving various stakeholders. We propose that firms tend to engage in better ESG activities when they receive more public attention. Our results show that the greater the online search attention given to firms, the better the ESG is of the managers, especially for the firms involved in negative news. The association is more pronounced when firms face higher product market competition. Furthermore, ESG is a novel channel for the impact of online search attention on firms' operating performance (capital operating efficiency and profitability). These results are further validated through a series of robustness tests. The findings highlight an additional corporate governance mechanism from online search attention.

Suggested Citation

  • Zhao, Xuezhou & Fang, Libing & Zhang, Ke, 2023. "Online search attention, firms’ ESG and operating performance," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 223-236.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:223-236
    DOI: 10.1016/j.iref.2023.06.025
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    References listed on IDEAS

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    1. Rui Albuquerque & Yrjö Koskinen & Chendi Zhang, 2019. "Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence," Management Science, INFORMS, vol. 65(10), pages 4451-4469, October.
    2. Jiaxing You & Bohui Zhang & Le Zhang, 2018. "Who Captures the Power of the Pen?," The Review of Financial Studies, Society for Financial Studies, vol. 31(1), pages 43-96.
    3. Umit G Gurun & Noah Stoffman & Scott E Yonker, 2018. "Trust Busting: The Effect of Fraud on Investor Behavior," The Review of Financial Studies, Society for Financial Studies, vol. 31(4), pages 1341-1376.
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    Cited by:

    1. Hui Zhi & Yuanying Chi & Rui Peng & Kaiye Gao, 2024. "Does Investor Attention Affect Corporate Greenwashing? Evidence from China," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(4), pages 1-6.
    2. Chen, Qi & Li, Menghan, 2024. "Environmental regulatory system reform and corporate ESG ratings: Evidence from China," Economic Modelling, Elsevier, vol. 135(C).
    3. Li, Dengjia & Ma, Chaoqun & Yang, Jinglan & Li, Hao, 2024. "ESG performance and corporate fraud," Finance Research Letters, Elsevier, vol. 62(PB).
    4. Chen, Yinghui & Tong, Ying & Zhou, Can, 2024. "Non-mandatory approaches to corporate environmental engagement: Insights from the Belt and Road Initiative," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1287-1301.

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