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ESG and Chinese corporate OFDI

Author

Listed:
  • Cheng, Zhonghua
  • Su, Yang

Abstract

In this era of sustainable development, ESG information disclosure and its capacity to fulfill goals have a significant influence on the outward foreign direct investment (OFDI) of Chinese firms. Using data from A-share listed businesses in Shanghai and Shenzhen from 2010 to 2020, this study empirically studies both the impact and mechanism of ESG information disclosure on corporate OFDI. According to the study, the greater a corporate's ESG rating, the more likely it is to engage in OFDI activities. Mechanism analysis shows ESG primarily supports corporate OFDI by easing financial limitations, lowering business risks, optimizing location choices, and strengthening reputation mechanisms. The heterogeneity study indicates this impact is stronger in large-scale firms, state-owned enterprises, and enterprises not subject to key supervision. Lastly, a further study indicates not only that ESG ambiguity reduces the promotion effect of ESG on corporate OFDI, but that high-quality disclosure also promotes OFDI more than purely symbolic low-quality ESG disclosure.

Suggested Citation

  • Cheng, Zhonghua & Su, Yang, 2024. "ESG and Chinese corporate OFDI," Research in International Business and Finance, Elsevier, vol. 72(PA).
    • Handle: RePEc:eee:riibaf:v:72:y:2024:i:pa:s0275531924003155
    DOI: 10.1016/j.ribaf.2024.102522
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