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Efforts Toward Corporate Sustainability: Does ESG Performance and Technological Innovation Drive Corporate Financing Efficiency in China?

Author

Listed:
  • Muhammad Suhrab

    (School of Management, Huazhong University of Science and Technology (HUST), Wuhan, P. R. China)

  • Pinglu Chen

    (��School of Management, Chair of the Department of Public Finance, Vice Dean and Leader of the Institute of Poverty Reduction and Development, Huazhong University of Science and Technology (HUST), Wuhan, P. R. China)

  • Ningyu Qian

    (School of Management, Huazhong University of Science and Technology (HUST), Wuhan, P. R. China)

Abstract

This study examines the impact of environmental, social, and governance (ESG) performance and technological innovation (TI) on corporate financing efficiency (CFE) in Chinese firms. Data from 400 companies listed in the Shanghai and Shenzhen A-share markets, alongside ESG scores, were derived from the Thomson Reuters ESG scoring system spanning 2013–2022. Fixed effects (FE) and quantile regressions were employed to explore this relationship. The findings demonstrate that ESG and TI have significant and positive effects on CFE. Furthermore, TI is a moderator that strengthens the linkage between ESG and CFE. Findings emphasize the critical importance of ESG performance in obtaining cost-effective financing for Chinese firms. This underscores the critical need for businesses and regulators to prioritize and integrate ESG practices into corporate strategies. Such integration facilitates access to lower-cost financing, enhances cost efficiency, and optimizes investments in green technology. The findings emphasize the importance of fostering a sustainable corporate culture that supports the alignment of TI with ESG principles in business operations. These outcomes carry substantial implications for the corporate sector and regulatory frameworks, highlighting the pivotal role of sustainable practices in driving financial performance and long-term prosperity.

Suggested Citation

  • Muhammad Suhrab & Pinglu Chen & Ningyu Qian, 2024. "Efforts Toward Corporate Sustainability: Does ESG Performance and Technological Innovation Drive Corporate Financing Efficiency in China?," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 21(08), pages 1-28, December.
    • Handle: RePEc:wsi:ijitmx:v:21:y:2024:i:08:n:s0219877024500615
    DOI: 10.1142/S0219877024500615
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