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Environmental, Social, Governance Risk and Corporate Sustainable Growth Nexus: Quantile Regression Approach

Author

Listed:
  • Xiaodong Teng

    (School of Accountancy, Shandong University of Finance and Economics, Jinan 250014, China)

  • Yanzhi Wang

    (School of Accountancy, Shandong University of Finance and Economics, Jinan 250014, China)

  • Aiguo Wang

    (School of Accountancy, Shandong University of Finance and Economics, Jinan 250014, China)

  • Bao-Guang Chang

    (Department of Accounting, Tamkang University, New Taipei City 251301, Taiwan)

  • Kun-Shan Wu

    (Department of Business Administration, Tamkang University, New Taipei City 251301, Taiwan)

Abstract

Despite a huge body of literature revealing that the effect of environmental, social and governance (ESG) scores on a firms’ financial performance and value, it lacks the empirical research on the nexus between corporate sustainable growth and ESG risk in the existing research. The paper aims to examine the nexus between ESG risk and corporate sustainable growth. This study utilizes a quantile regression approach to explore how ESG risk affects corporate sustainable growth (proxied by sustainable growth rate, SGR). The ordinary least squares estimation results confirm that ESG significantly negatively affects corporate sustainable growth. The quantile regression results reveal ESG risk has a significant negative effect on corporate sustainable growth in the upper quantiles of SGR, but not in the lower and median quantiles. The results show that the impact of ESG risk on the corporate sustainable growth is asymmetric and affected by the distribution of SGR. Furthermore, the research results identify that the negative relationship between ESG risk and corporate sustainable growth is particularly apparent for firms in environmentally sensitive industries. This study greatly contributes to existing literature, as with this detailed knowledge, managers can make decisions based on these associations and identify the most lucrative course of action.

Suggested Citation

  • Xiaodong Teng & Yanzhi Wang & Aiguo Wang & Bao-Guang Chang & Kun-Shan Wu, 2021. "Environmental, Social, Governance Risk and Corporate Sustainable Growth Nexus: Quantile Regression Approach," IJERPH, MDPI, vol. 18(20), pages 1-15, October.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:20:p:10865-:d:657480
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    References listed on IDEAS

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    Cited by:

    1. Han Long & Gen‐Fu Feng & Qiang Gong & Chun‐Ping Chang, 2023. "ESG performance and green innovation: An investigation based on quantile regression," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 5102-5118, November.
    2. Enrico Bernardini & Marco Fanari & Enrico Foscolo & Francesco Ruggiero, 2024. "Environmental data and scores: Lost in translation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4796-4818, September.
    3. Sanoran, Kanyarat (Lek), 2023. "Corporate sustainability and sustainable growth: The role of industry sensitivity," Finance Research Letters, Elsevier, vol. 53(C).
    4. Bagh, Tanveer & Zhou, Bingjun & Alawi, Suha Mahmoud & Azam, Rauf I, 2024. "ESG resilience: Exploring the non-linear effects of ESG performance on firms sustainable growth," Research in International Business and Finance, Elsevier, vol. 70(PA).
    5. Yang Yang & Jinmian Han, 2023. "Digital transformation, financing constraints, and corporate environmental, social, and governance performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3189-3202, November.
    6. Monica Singhania & Dimple Gupta, 2024. "Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3573-3613, July.

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