Do large companies have better environmental performance? Evidence from Chinese listed companies

Introduction: In the context of global advocacy of sustainable development, the environmental, social and governance (ESG) performance of firms, as an important indicator for measuring the sustainability of corporate development, has been widely used in the process of corporate management decision-making and financial market investment. Thus, examining the influence of firm size, a key factor, on ESG performance is essential for driving corporate sustainability. Large companies have longer-term development goals and greater social responsibility, often placing greater emphasis on environmental issues. On the other hand, large companies face more difficult management problems than small companies, e.g., coordination between superiors and subordinates, coordination between departments. Thus, the low efficient coordination will affect environmental performance of large companies.

Methods: This study investigates the relationship between Environmental, Social, and Governance (ESG) performance and firm size using a sample of Chinese A-share listed companies from 2012 to 2021. Firm size is proxied by total assets, the number of employees, and operating revenue.

Results: The results show that ESG performance is positively correlated with firm size. The correlation coefficients between asset, employee, revenue and ESG are 0.253, 0.268, and 0.200, respectively. The results are robust for different nature of ownership and pollution.

Discussion: The study suggests that governments and investors should consider the different ESG capacity between large and small companies to make fair decisions.

1 Introduction

With the continuous economic growth, the new concept of Sustainable Development has gradually entered people’s view. The development of human society and protection of ecology system are two main issues for contemporary human. Sustainable Development integrate above issues, and commit to a balance between development and protection (Steffen et al., 2015). In contemporary society, sustainable development becomes the theme of the times. Firms, as the key entities for energy conservation and emission reduction, should make every effort to sustainable development. ESG (Environment, Social and Governance) concept has garnered extensive attention from the practical and academic communities. ESG is a framework for measuring the sustainability of enterprise development from dimensions of environmental, social and governance. This concept facilitates different subjects like businesses and investors to integrate three dimensions into their business models. It helps them to make proper decisions (Gillan et al., 2021). ESG first appeared in the field of financial investment. United Nations Environment Programme proposed to incorporate the ESG performance into its decision-making process in 1992. United Nations established the Principles for Responsible Investment (PRI). In the early 21st century, PRI incorporated ESG as a significant factor into practices like investment and operation. ESG was formally proposed as a unified concept. The environmental performance involves the factors that aim at benefiting the environment, including environmental policy, capacity in tackling climate change, energy and resource consumption. The social performance involves the factors that aim at social influence of production and policies, including community investment, supply chain management, equal employment opportunity, staff development. The corporate governance performance involves adopting good governance practices, e.g., corporate governance structure, business ethics.

Previous studies found the relationship between ESG performance and economic performance of firms, but a lot of studies ignore the impact of firm characteristics. Firm size, board size, independence of the board and other firm characteristics may have a certain relationship with ESG performance. Deeply investigating the impact of firm size, a critical factor, on ESG performance is of great significance for promoting corporate sustainable development. On one hand, changes and adjustments in firm size are typically oriented towards enhancing economic efficiency, yet their effect on ESG performance remains unclear. On the other hand, identifying the optimal firm size that achieves the lowest long-term average cost and the highest profit margin has been a central focus in academia. Therefore, it is necessary to examine the issue of optimal firm size from the longer-term perspective of corporate sustainable development. In terms of the characteristic variable firm size, a previous study has demonstrated that the ESG scores do not correlated with firm size (Gregory, 2024). The relationship identified using OLS regression might not capture the influence of other relevant factors, potentially leading to different conclusions. The explanation of the relationship is not sufficiently persuasive. Besides, the aim of Gregory’s study is to question the organizational legitimacy’s explanation on size and ESG score. We argue that stakeholder theory plays a crucial role in explaining the relationship between firm size and ESG performance. Stakeholder theory emphasizes that a firm’s survival and development depend not only on the interests of shareholders but are also influenced by a diverse set of stakeholders, including employees, customers, suppliers, communities, governments, and the environment. Therefore, grounded in stakeholder theory, this study employs a fixed-effects model to investigate the impact of firm size on the ESG performance of Chinese companies. The novelty of this study is that it uses total assets, number of employees and revenues for measuring firm size. Previous studies about firm size often use single variable such as total assets to measure firm size. Besides, this study divides the firms into different nature of ownership as well as different nature of pollution for heterogeneity test. The results show that a positive correlation exists between firm size and ESG performance. Practically, examining the relationship between firm size and ESG performance can enable investors to make more comprehensive and sustainable investment decisions. This study contributes to the achievement of long-term investment objectives ultimately. Meanwhile, this paper helps the government to take into account the impact factor of firm size when formulating industrial and environmental policies.

The remainder of the paper is organized as follows: in the next section, we review the literature on firm size and environmental, social and governance performance. Next, we describe the methodology and the data sources. In the Results section, we analyze the empirical tests result of the relationship between firm size and ESG performance of Chinese listed companies. Next, we discuss how firm size affects ESG performance and elucidate the underlying transmission mechanisms. Finally, we conclude with a summary and highlight the policy implications derived from our study.

2 Literature review

2.1 Theoretical foundation

Stakeholder Theory was first introduced by Freeman (1984) in his book Strategic Management: A Stakeholder Approach. He defined stakeholders as any group or individual who can affect, or is affected by, the achievement of an organization’s objectives. This theory posits that a firm is not solely connected to its shareholders but is bound through a series of contracts formed via negotiations and transactions with numerous stakeholders. These stakeholders include, but are not limited to, investors, management, employees, customers, suppliers, government agencies, and local communities. Consequently, corporations must consider the interests of all these parties in their operations and governance. Building on this, Mitchell refined the scope of stakeholders by identifying three key attributes: power, legitimacy, and urgency (Mitchell et al., 1997). Jones extended Stakeholder Theory into business and social research, arguing that firms which prioritize stakeholder management gain significant competitive advantages (Jones, 1995). This extension provides a theoretical foundation for applying Stakeholder Theory in Corporate Social Responsibility (CSR) and ESG research.

Institutional Theory broadens this perspective by focusing on external pressures. It proposes that organizations are shaped by their institutional environment. DiMaggio and Powell (1983) described three isomorphic processes that drive organizations to become similar (Powell, 1983). These are coercive isomorphism from regulations, normative isomorphism from professional standards, and mimetic isomorphism from copying peers. Firms adopt widely accepted practices to secure legitimacy and social support. Therefore, Institutional Theory explains the systemic forces that push companies, particularly large ones, to adopt strong ESG practices.

The Resource-Based View (RBV) shifts the focus to internal capabilities. This theory sees firms as unique collections of resources. Barney (1991) argued that sustainable advantage comes from resources that are valuable, rare, and difficult to imitate (Barney, 1991). Effective ESG performance demands significant investments. It requires financial capital, specialized management, and advanced technology. Larger firms typically possess a greater reservoir of these critical resources. Consequently, the RBV explains how internal capacity enables firms to implement successful ESG initiatives.

In summary, these three theories create a comprehensive framework. Stakeholder Theory identifies the key actors. Institutional Theory explains the external motivations for action. The Resource-Based View details the internal means for execution. Together, they provide a strong basis for predicting that larger firms, facing greater pressures and possessing more resources, will demonstrate superior ESG performance.

2.2 Relationship between ESG performance and firm value

The majority of ESG-related studies focus on the relationship between ESG performance and firm value. Firm value refers to the total worth of a firm’s production capacity, encompassing both the value represented by its capital and the value newly generated through labor. Literatures focus on the financial performance, such as Tobin Q, Market Capitalization, ROA and ROE. ESG performance is positively related with these indicators, thereby firms’ ESG performance will foster firms’ sustained growth and advancement in financial and capital market (Garcia et al., 2017).

ESG performance also impacts the innovation capacity. The innovation capacity of the firm is measured by the number of patent applications in empirical studies. Scholars investigate the mechanisms that factors such as digital transformation and market competition intensity perform the moderating functions between the positive relationship (Chang and Wang, 2024). Likewise, mediating effect was achieved by enhancing a firm’s dynamic capabilities bolstering corporate reputation, and alleviating financial constraints (Wang and Chu, 2024). Besides, the positive relationship may relate to firm size. Large firms possess greater resources and lower costs. Therefore, they have abundant resources in communicating and achieving their commitments effectively (Chen et al., 2023).

Existing studies focus on the impact of external uncertainty and internal firm characteristics on ESG performance. Economic policy uncertainty has been shown to intensify competition within industries. Moreover, policy uncertainty also concurrently elevates consumer risk perception, thereby influencing market dynamics and consumer behavior. Consequently, firms may view ESG performance as intangible assets that can enhance competitive edge and mitigate the impact of consumer negative emotions (Li et al., 2024). Government procurement policies and government subsidies serve as forms of government endorsement. Government endorsement not only alleviate firms’ cash flow and financing constraints but also enhance ESG performance (Xia et al., 2023). Investment, as a form of external uncertainty, exerts an influence on the ESG performance. A mutual inhibition effect is observed, which is different from other effects. The increase in ESG performance or investor attention decreases another variable. The possible reason is investors focus on the firms with lower ESG performance and higher stock returns, in order to receive excess return (Gu, 2024).

Internal firm characteristics focus on the impact of board structure, wage level, firm size and other characteristics on ESG performance. In terms of board structure, board independence and women director may have an impact on it. By reason of stronger supervisory role and extensive expertise, firms featuring higher board independence exhibit a stronger sense of social responsibility (Bolourian et al., 2021). Similarly, female directors devote themselves to the charities, social organizations and business ethics. The high percentage of female directors also tend to demonstrate enhanced social responsibility (Uyar et al., 2020). Undertaking social responsibility helps to promote the dissemination of a positive corporate image, thereby promoting ESG performance. In terms of wage level, higher minimum wage reflects the respect and concern for its employees (Zhang et al., 2024). Firm size, as an internal characteristic of the firm, will be discussed in detail in the next three sections.

2.3 Relationship between firm size and environmental performance

The production efficiency and resource allocation are related to firm size. Existing studies reached a coincident conclusion that firm size has a positive impact on environmental performance.

Global Reporting Initiative (GRI) provides guidance for measuring environmental performance. Under the guidance of PRI, He and Hou (2010) quantitatively assessed the performance of 112 China’s listed companies. The relationship is significant positive. Large-scale firms face greater pressure and motivation, so that they disclose relative information to ensure public support (He and Hou, 2010). Besides subjective assessment, the environmental performance can also be measured by annual reports. For listed companies, disclose essential information in annual reports is indispensable. Lin found a positive relationship between quality and size by analyzing annual reports, which is reconfirm the positive relationship (Lin et al., 2021). Research conducted abroad also draws a similar conclusion. UK scholars assess environmental performance across various facets such as environmental targets and environmental audit. The quality of disclosure may be affected by firm size (Song et al., 2017).

As the key emission units, large firms are facing strong environmental supervision. They will adopt additional measures to protect the environment (Xia et al., 2023). For manufacture firms, the costs of updating environmental protection equipment are enormous. Large firms have capacity to invest more funds in environmental protection. Moreover, the average production costs of large firms are relatively low. From another point of view, large firms gain more profits and achieve these profits more efficiently from environmental innovation activities. These profits will cover their costs of innovation rapidly (Miao et al., 2019). In addition, the deep research on environmental performance evaluation and its associated indicators is still lacking. Improving the comprehensiveness and scientific rigor of the evaluation system is worth to explore (Elia et al., 2017).

2.4 Relationship between firm size and social performance

Studies on social performance are more prevalent. The concept of Corporate Social Responsibility (CSR) is popular in recent years. The positive relationship between firm size and corporate social responsibility is relatively consistent.

Early scholars found a significant positive relationship by conducting qualitative research. Nonetheless, they concede that their findings are limited by research methodology and data constraints (Gamerschlag et al., 2010). Subsequently, scholars have integrated both qualitative and quantitative methods to reconfirm the research outcomes. The number of corporate social information disclosure is often used to measure corporate social performance. Through empirical examination, research consistently concludes that larger firms are apt to disclose high-quality social information (Branco and Rodrigues, 2008). Resource-based view (RBV) indicates that competitive edge is composed of unique and inimitable capabilities. From the perspective of RBV, large firms are willing to invest in and conduct CSR activities to sustain their competitive advantage (Okafor et al., 2021).

In addition, evidence indicates that environmental and social disclosures are related to higher profitability (Gamerschlag et al., 2010). It provides us with a new way to explain economies of scale. Due to higher visibility and a more diverse range of stakeholders, large enterprises face greater pressures from political, regulatory, and societal sources (Hörisch et al., 2014). In response to the pressures above, large enterprises disclose more information and engage in more pro-social behaviors to justify themselves (Ali et al., 2017). Hence, large firms tend to have higher profitability.

2.5 Relationship between firm size and corporate governance performance

Studies about the effect on corporate governance is relatively limited, but existing studies do confirm that the impact is exist. The impact is generally observed through factors such as the technological proficiency, digital transformation, and R&D engagement.

Analyzing from the perspective of firm technical efficiency, large-scale firms typically enhance the wages of workers by improving firm technical efficiency. This improvement, to a certain extent, is a response to the enhancement of corporate governance capabilities (Zhang et al., 2024). Analyzing from the perspective of digital transformation, large-scale firms have higher requirements for the level of digital transformation. They tend to invest in digital technology. At the same time, digital transformation helps to enhance corporate governance capabilities. The enhancement is reflected in the perfection of management systems, the clarification of organizational structures, and the sufficient reserve of talent (Wang and Esperança, 2023). Analyzing from the perspective of firm R&D, the study finds a positive effect. As a proxy for discretionary power, R&D investment reflects corporate governance performance. Managers with superior governance ability can increase R&D investment to drive long-term profitability (Hirschey et al., 2012). In addition, firms’ strategic choices in terms of internationalization and diversification also reflect corporate governance. Firm size performs a moderating effect on firm internationalization and sustainability performance (Alsayegh et al., 2020). It is noteworthy that firm size is used as a control variable in empirical research normally. However, many management situations are driven by firm size. Scholars should pay more attention to firm size in future research (Benito-Osorio et al., 2016).

Many literatures investigate the impact of ESG performance. These studies follow the mindset of sustainable finance. Other studies have explored the antecedents of ESG performance, such as the effect of external uncertainty and internal firm characteristics. However, as an internal characteristic, firm size is worth to further explore. Based on Drepetic’s study (Drempetic et al., 2019), Gregory (2024) explored the influence of firm size. It is found that there is no significant relationship between them. This scholar also questioned the explanatory power of organizational legitimacy. However, there remain two main questions that require further discussion. The one is that the study simply used OLS regression The influence of other factors like year and industry are not excluded. Another one is that the study has disproportionately focused on the influence of different rating agencies rather than the relationship between them. Besides, the influence of firm size in China deserves to explore.

The existing literatures confirmed the positive relationship between firm size and E, S and G. Nevertheless, some research simply used environmental and social expenditure to measure environmental and social performance. Instead, ESG framework, recognized for its scientific and comprehensive multi-dimensional approach, provides a more stringent and dependable method of evaluation.

In summary, Stakeholder Theory establishes a robust theoretical bridge between a firm’s conventional management objectives and its focus on Environmental, Social, and Governance (ESG) concerns. The theory emphasizes that a firm’s survival and development depend not only on shareholder interests but are also influenced by a diverse set of stakeholders, including employees, customers, suppliers, communities, governments, and the environment. Consequently, while pursuing economic benefits, firms must fully consider and respond to the demands and expectations of these stakeholders. By focusing on ESG performance, a company can not only effectively manage its relationships with the external environment and society but also enhance its long-term competitiveness and sustainable development capabilities.

3 Methodology

3.1 Data sources

The A-share market is China’s mainland stock market, reflecting the overall situation of China’s domestic economy and the operation of the capital market. Therefore, this paper selected 10 years data from 2012 to 2021 as research samples. China Stock Market & Accounting Research (CSMAR) and Wind database are several frequently used databases in China. It includes firm characteristics, economic and technical indicators and so on. We accessed the data of ESG ratings from Sino-Securities Index database. Sino-Securities Index database provides ESG rating data. The data is characterized by four features: localization, wide coverage, significant investment performance, and high timeliness. Additionally, we compared the ESG ratings from current major agencies, including several key Chinese providers. We observed a general consistency in the results across these different sources. Sino-Securities Index database divided ESG ratings into nine levels, from C to AAA. C represents the lowest level of ESG performance and AAA represents the highest. To make our paper more accurate and compelling, we implemented the following treatments: (1) Excluding financial and insurance companies, these firms have some specificity; (2) Excluding listed companies under special treatment; (3) Excluding companies without full data. In addition, we removed the upper and lower 1% of all continuous variables to mitigate noise from extreme values.

3.2 Models

The dependent variable is ESG ratings. We assigned scores of 1–9 to each of the C to AAA ratings. Higher scores indicate the higher ESG performance. In empirical research, firm size is commonly measured by total assets, number of employees and revenues (Gallego-Álvarez et al., 2013; Hörisch et al., 2014). Similarly, the National Bureau of Statistics of China (NBS) also categorize firms by revenues and employees into different scales. These firms are divided into large firms, medium firms, small and micro firms. Nonetheless, the remarkable thing is that individual indicators have some limitations. The inaccuracy of operating revenue and total assets in reflecting the scale of capital-intensive sectors like construction, real estate, and leasing services. The unreliability of the number of employees in assessing labor-intensive industries. We employ a composite approach to measure firm size. By considering operating revenue, number of employees, and total assets collectively, we try to provide a more nuanced assessment of firm size.

The control variables in the model are as follows: LEV, leverage ratio; AGE, firm age; ROA, return on assets; GROWTH, asset growth rate; FIXED, fixed asset ratio. These variables are proved relevant to ESG performance in literatures (Arayssi et al., 2020; DasGupta, 2022; Gu, 2024; Wang and Chu, 2024). The leverage ratio (LEV) is total liabilities to total assets. LEV reflects the capital structure of firms, significantly influencing the stability of production and operations, as well as the effectiveness of governance. Firm age (AGE) places companies at various stages of their life cycle. Strategic decisions undertaken by firms at distinct lifecycle stages exert a profound influence on ESG performance. Return on assets (ROA), the net profit to total assets, is a key indicator of firms’ financial efficiency. Firms with higher ROA experience diminished financial strain. Therefore, firms are better positioned to focus more on improving ESG performance. Asset growth rate (GROWTH) indicates the annual growth rate of total assets of firms. Firms exhibiting higher growth tend to demonstrate a heightened focus on their performance across various dimensions like ESG performance. The fixed assets ratio (FIXED), as an indicator of financial structure stability, is net fixed assets to total assets. In turn, the stability may exert an influence on the company’s operational capacity and its ESG performance. The relevant information above is summarized in Table 1.

Table 1

Table 1. Descriptions of the variables.

In addition, the industry characteristics, macroeconomic environment, and other time-varying factors not considered may also affect the ESG performance of firms. Hence, adding industry and time fixed effects to the model is necessary Then, we conduct the Hausman test to verify the feasibility. The Hausman test result is 0, rejecting the null hypothesis, thus opting for the fixed effects model.

Descriptive statistics are shown in Table 2. The mean value of ESG ratings for the research sample is 4.1. The firm age of samples ranges from 1 to 27 years, with an average of 9.7 years. The correlation coefficient matrix is shown in Table 3.

Table 2

Table 2. Descriptive statistics.

Table 3

Table 3. Correlation matrix.

Regression test using total assets as shown in Equation 1:

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}=}{\alpha }_0+{\alpha }_{1}ln\left({\text{ASSET}}_{\mathrm{i},\mathrm{t}}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}+{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}+{\alpha }_6{\text{FIXED}}_{\mathrm{i},\mathrm{t}}\\ +\Sigma \text{YEAR}+\Sigma \mathrm{IND}+{ϵ}_{\mathrm{i},\mathrm{t}}\end{array}\text{ (1)}$

Regression test using the number of employees in the firm as shown in Equation 2:

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}}={\alpha }_0+{\alpha }_{1}ln\left({\text{EMPLOYEE}}_{\mathrm{i},\mathrm{t}}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}+{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_6{\text{FIXED}}_{\mathrm{i},\mathrm{t}}+\Sigma \text{YEAR}+\Sigma \mathrm{IND}+{\in }_{\mathrm{i},\mathrm{t}}\end{array}\text{ (2)}$

Regression test using firm’s main business revenue as shown in Equation 3:

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}}={\alpha }_0+{\alpha }_{1}ln\left({\text{REVENUE}}_{\mathrm{i},\mathrm{t}}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}+{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}+{\alpha }_6{\text{FIXED}}_{\mathrm{i},\mathrm{t}}\\ +\Sigma \text{YEAR}+\Sigma \mathrm{IND}+{ϵ}_{\mathrm{i},\mathrm{t}}\end{array}\text{ (3)}$

Where ASSET denotes total assets; EMPLOYEE denotes the number of employees; REVENUE denotes the main business revenue; ESG denotes the ESG rating of firm. The control variables LEV denotes the leverage ratio; AGE denotes the age of the firm; ROA denotes the return on assets; GROWTH denotes the growth rate of assets; FIXED denotes the ratio of fixed assets. ${\alpha }_0$ denotes constant term; ${\alpha }_1~{\alpha }_6$ donates regression coefficients for each variable. YEAR and IND denotes the year and industry; $\in$ denotes the random error term; the footnote i and t denotes the firm and the year.

Furthermore, this study calculated the Variance Inflation Factor (VIF). After testing, we found the value of the VIF between the independent variables is 3.0. The result indicates that independent variables pass the test of multicollinearity.

Previous studies have demonstrated that different ownership nature has an important impact on ESG performance (Chang and Wang, 2024; Zeng and Jiang, 2024). Hence, we analyze the heterogeneity of the sample firms according to the nature of ownership. State-owned firms, serving dual roles as agents of state intervention and market participants, are characterized by a “policy nature” and a “mandatory nature.” Through the division, 14,996 data of state-owned firms and 7,121 data of non-state-owned firms are obtained. Polluting firms face stricter environmental regulations, such as regulatory pressure, social pressure, etc. Polluting firms will pay more attention to their sustainability. In some extent, they put more effort into reduce the pollution, in order to avoid pay more than necessary (Iwata and Okada, 2011). Therefore, we divided firms into two categories. Ministry of Ecology and Environment of China provides a standard for dividing different nature of pollution. On this basis, we select 15 polluting industries, including coal industry, oil and gas industry, textile industry and so on. In order to mitigate the endogeneity problem, we lagged the explaining variable for robustness test. We lagged one period of the three proxy variables of firm size as shown in Equations 4–6.

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}}={\alpha }_0+{\alpha }_{1}ln\left({\text{ASSET}}_{\mathrm{i},\mathrm{t}-1}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}+{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}+{\alpha }_6{\text{FIXED}}_{\mathrm{i},\mathrm{t}}\\ +\Sigma \text{YEAR}+\Sigma \mathrm{IND}+\in \end{array}\text{ (4)}$

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}}={\alpha }_0+{\alpha }_{1}ln\left({\text{STAFF}}_{\mathrm{i},\mathrm{t}-1}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}+{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}+{\alpha }_6{\text{FIXED}}_{\mathrm{i},\mathrm{t}}\\ +\Sigma \text{YEAR}+\Sigma \mathrm{IND}+ϵ\end{array}\text{ (5)}$

$\begin{array}{l}{\mathrm{ESG}}_{\mathrm{i},\mathrm{t}}={\alpha }_0+{\alpha }_{1}ln\left({\text{INCOME}}_{\mathrm{i},\mathrm{t}-1}\right)+{\alpha }_2{\mathrm{LEV}}_{\mathrm{i},\mathrm{t}}+{\alpha }_3{\mathrm{AGE}}_{\mathrm{i},\mathrm{t}}\\ +{\alpha }_4{\mathrm{ROA}}_{\mathrm{i},\mathrm{t}}+{\alpha }_5{\text{GROWTH}}_{\mathrm{i},\mathrm{t}}+{\alpha }_6{\text{FIXEDI}}_{\mathrm{i},\mathrm{t}}\\ +\Sigma \text{YEAR}+\Sigma \mathrm{IND}+\in \end{array}\text{ (6)}$

Besides lagged variable, we also replace the explained variable in order to examine the robustness. SynTao Green Finance database is another mainstream ESG database in China. This database takes international standard and Chinese realistic into consideration, rating the firm performance from A + to D. Besides Sino-Securities Index database, SynTao Green Finance database is commonly used in Chinese research. We assigned scores of 1–10 to each of the D to A + ratings for regression.

4 Results

4.1 Relationship between firm size and ESG performance

By using fixed effect model to control the year and industry, we conducted the regression. Relevant results are shown in Table 4. The correlation coefficients between asset, employee, revenue and ESG are 0.253, 0.268, and 0.200 with 1% level significance. The result indicates that three substitute variables of firm size have a positive impact and ESG performance for Chinese listed companies. For measuring firm size by employees, the correlation coefficient is higher than others.

Table 4

Table 4. Regression results of three models using (1) total assets, (2) number of employees, (3) revenue as variables measuring firm size.

4.2 Heterogeneity test

The heterogeneity test of the nature of ownership reconfirms a positive relationship between firm size and ESG performance. The relationship is robust regardless of the nature of ownership (Table 5). Firm size is often measured by total assets in numerous research. For measuring firm size by total asset, the correlation coefficients of state and non-stated firms are different. The coefficient of state-owned and non-state owned is 0.288 and 0.280, respectively. We find that state owned firms benefit more than non-stated firms on ESG performance. The coefficient of state-owned is larger. This study finds that state-owned firms demonstrate significantly superior performance in Environmental, Social, and Governance (ESG) compared to non-state-owned firms. This heterogeneous result primarily stems from the unique institutional positioning of state-owned firms. The close relationship between state-owned firms and the state endows them with a “policy-oriented” nature, which necessitates that their corporate strategies align closely with national policy directives. This connection manifests in two key aspects: First, regarding regulatory pressure, the “mandatory” characteristic of state-owned firms subjects them to direct and stringent administrative supervision from bodies such as the State-owned Assets Supervision and Administration Commission (SASAC), where ESG performance is directly linked to managerial assessments. Under such substantial institutional pressure, state-owned firms exhibit higher compliance and proactiveness towards regulations and policies. Second, in terms of resource acquisition, the policy role of state-owned firms affords them advantages in obtaining government subsidies, green credit, and other resources. Actively improving ESG performance thus becomes a strategic necessity for maintaining political legitimacy and securing continued resource support. Therefore, from the perspective of institutional theory, the strong dependency of state-owned firms on the policy environment and their pursuit of legitimacy systematically drive their more outstanding ESG performance.

Table 5

Table 5. Heterogeneity analysis—by different ownership.

But this finding cannot be extended to measuring firm size by staff and revenue. In terms of state-owned firms, the coefficient of employees and revenues is 0.298 and 0.211, respectively, smaller than those of non-state-owned firms. The possible reason is that these different variables only represent firm size in a certain extent. The concrete nature of three proxy variables might be different.

The heterogeneity test of the nature of pollution shows a reconfirms a positive relationship between firm size and ESG performance (Table 6). As shown in Table 6, the correlation coefficients are different for polluting and no-polluting firms. In terms of polluting firms, the coefficient of total assets and employees is 0.259 and 0.275, respectively at the 1% level, larger than those of non-polluting firms. This demonstrates that compared to non-polluting firms, polluting firms’ firm size has a stronger influence on ESG performance. Large firms with high-profile should be faced with strict regulation originally, the nature of polluting reinforces this regulation to a large extent on this basis. Besides, the government of China introduce various regulations in order to restrict the emission. This also can be seen as a powerful response to dual carbon goals. Under these circumstances, polluting firms make more efforts in cleaning their production. Hence, their ESG performance has been improved greatly.

Table 6

Table 6. Heterogeneity analysis—by different nature of pollution.

4.3 Robustness test

The coefficients of the lag variables of asset, employee and revenue are 0.265, 0.292, and 0.231, respectively (Table 7). The direction of the coefficients and the significance level are consistent with baseline regression.

Table 7

Table 7. Robustness test-lag variable.

In terms of replacing the explained variable, the coefficients of asset, employees, revenues are 0.323, 0.248 and 0.166, respectively at the 1% level (Table 8). The positive relationship is observed in three models. After testing the robustness by the above two methods, we conclude that the research findings are robust.

Table 8

Table 8. Robustness test-replace explained variable.

5 Discussion

The results indicate a positive relationship between firm size and ESG performance. This finding can be effectively interpreted through the lens of stakeholder theory, which posits that a firm’s sustainability hinges on its ability to manage relationships with diverse stakeholders. The following discussion elucidates the potential mechanisms, drawing also on insights from the resource-based view and institutional theory to provide a comprehensive explanation.

First, large-scale firms benefit from economies of scale and economies of scope probably. Specifically, economies of scale refer to the decline in marginal cost as the scale of business operations expands, while economy of scope refers to the relatively lower cost of jointly producing multiple products (Panzar and Willig, 1981). Economies of scale and economy of scope help companies grow through specialization and division of labor, thereby reducing costs and enhancing efficiency. These two aspects also lead to closer business integration and a wider range of products. Critically, pollutant treatment and governance activities are inherently characterized by such economies. Consequently, large firms incur lower average environmental protection costs, freeing up substantial internal capital. This financial resource slack, a concept aligned with the resource-based view, is essential for meeting the varied expectations of stakeholders. It enables firms to invest in R&D and innovation for sustainable development (Chen et al., 2024), which responds to societal and investor pressures for greener operations. Furthermore, sufficient capital enhances debt-servicing capacity and profitability, mitigating financing constraints—a key concern for investors and creditors. It also provides a buffer against risks, thereby strengthening overall resilience and ensuring the firm can uphold its commitments to all stakeholders, even during downturns (Bissoondoyal-Bheenick et al., 2023). In contrast, small-scale firms, lacking this resource buffer, face greater operational risks and information asymmetry, constraining their ability to respond effectively to stakeholder pressures.

Second, the superior innovation capability of large firms acts as a dynamic capacity to proactively anticipate and fulfill stakeholder expectations. In line with Schumpeter’s innovation theory, large firms possess more significant social and financial capital—including adequate funding, specialized equipment, rich talent pools, and robust risk control systems (Schumpeter, 2013). This resource endowment empowers them to drive innovation that enhances efficiency, promotes green transformation, and adopts cleaner production. Such innovations are not merely technical achievements; they are strategic responses to the explicit and implicit demands of stakeholders—including customers, communities, and regulators—for more sustainable business practices. By leveraging innovation, large firms can effectively improve their performance across the entire production and operational process, thereby solidifying their social license to operate. Conversely, Small and Medium-sized Enterprises (SMEs), constrained by weaker human and financial resources, find it challenging to implement sustainable development strategies effectively. Large firms, with their superior capital, facilities, and management experience, are better positioned to recognize the strategic importance of sustainability and invest proactively in the necessary management tools.

Finally, the high visibility of large firms subjects them to intensified scrutiny from a broad spectrum of stakeholders, creating powerful incentives for strong ESG performance. This mechanism is central to both stakeholder and institutional theories. Heightened media attention directly alleviates information asymmetry, pressuring firms to engage in stakeholder-friendly behaviors, such as increasing environmental investments (Bissoondoyal-Bheenick et al., 2023). On the other hand, large firms often face more intense government regulation (Lourenço and Branco, 2013). This “strong supervision” represents a formal institutional pressure that compels compliance and proactivity in environmental and social conduct. To maintain their legitimacy and social license, large firms must effectively respond to the expectations of government, society, and the public, which is subsequently reflected in superior ESG ratings.

6 Conclusion

Based on Chinese A-share listed companies, this paper examines the relationship between firm size and ESG performance. By using fixed effect model, this paper concludes that there is a positive relationship between them. In the heterogeneity test, the positive relationship exists in different nature of ownership, different nature of pollution.

Based on the results, we put forward some policy implications. First, ESG ratings should account for firm size. This can be done by adding a size factor or by using a classified system for large, medium, and small firms (Vilas et al., 2022). This approach ensures fairness and motivates all firms to improve their ESG performance. Empirical results show a clear, positive link between firm size and ESG performance. Larger firms have more resources and capabilities. This makes them more competitive in ESG practices. Therefore, integrating size into ratings makes the system fairer and more scientific. A differentiated method creates a level playing field. It also encourages firms to take realistic ESG actions based on their scale. This supports sustainable development. A good example is the European Union’s voluntary ESG standard for small and medium-sized enterprises (VSME ESRS). It was introduced in January 2024. The standard classifies firms by assets and employee number. It then provides tailored disclosure guidance. This helps improve ESG performance across the board while reducing the burden on smaller firms. China can learn from this model. Looking ahead, China should define what information must be disclosed. This should blend international ESG frameworks with national conditions. Building better databases is also crucial. Furthermore, researchers should bring new technologies into ESG ratings. For example, using geospatial data can make evaluations more precise. It can also better address differences between firms (Rossi et al., 2024). These steps will help build a rigorous, scientific, and accurate ESG evaluation system with Chinese characteristics.

Second, when evaluating corporate ESG performance and formulating policies, the government should carefully consider firm size. Our empirical study shows a significant correlation between firm size and ESG performance. There are clear differences in resources, capabilities, and risk resistance between large, medium, and small firms. Their foundations for ESG practices and potential for improvement also vary. A “one-size-fits-all” policy that ignores these differences can be problematic. It may impose excessive pressure on some firms. This could lead to wasted social resources and reduced policy effectiveness. For example, requiring small and micro firms to meet the same emission reduction standards as large firms in a short time might overwhelm them. It could even threaten their survival. Conversely, setting environmental targets too low for large firms might weaken their motivation to innovate. This would result in underutilized potential for emission reduction. Therefore, the government should adopt differentiated policies based on firm size. For large firms, the government can advocate for and set stricter ESG standards. These firms should take on greater responsibilities in environmental protection, social responsibility, and governance. They can play a leading role in green technology innovation and industry standard setting. For small and medium-sized firms, supportive measures are more appropriate. The government can offer incentives like tax reductions and financial support. These policies encourage green transformation within their capabilities and help improve their ESG performance. For instance, the Shanghai Municipal Commission of Commerce’s Three-Year Action Plan to Enhance ESG Capabilities of Foreign-Related Enterprises (2024–2026) provides a good example. It requires large state-owned firms to achieve full ESG disclosure coverage. Meanwhile, it aims for significant improvement in ESG disclosure by private listed companies. This differentiated approach is commendable. Furthermore, the Ministry of Ecology and Environment’s Opinions on Optimizing Environmental Impact Assessment for Small and Micro Enterprises explicitly recommends policy tilts for smaller firms. These include preferential market access and flexible environmental supervision. Putting them on a compliance positive list supports the development of green and low-carbon small and micro firms.

Third, financial institutions such as banks and insurance companies should take active measures to lower financing costs for small and medium-sized enterprises (SMEs). This can be achieved by providing financial support and preferential financing. Reducing financing costs helps SMEs overcome capital constraints. This, in turn, improves their ESG performance. This study confirms a positive correlation between firm size and ESG performance. It concludes that larger firms generally have better ESG performance. For SMEs, however, poor ESG performance may stem from capital constraints. They often lack the funds needed to invest in ESG improvements. Furthermore, enhancing green innovation and digital transformation requires significant ongoing investment. These investments are essential for green transformation and digital upgrading. They are also key to strengthening sustainable development capabilities and improving ESG performance. Therefore, when advancing these strategies, firms need sound financial planning. They should also actively seek diverse financing channels. This ensures the enhancement of long-term competitiveness and the achievement of sustainable development goals. First, it is important to cultivate “patient capital” and promote the involvement of long-term capital. Investment institutions should fully consider a company’s future development potential in their decisions. They should not focus solely on its debt repayment capacity. Second, investment institutions should actively implement the requirements of green finance guidelines. The China Banking and Insurance Regulatory Commission (CBIRC) issued the Green Finance Guidelines for Banking and Insurance Industries. These guidelines propose that relevant industries should establish ESG risk assessment standards. They also require incorporating ESG factors into the credit process. Relevant institutions must faithfully implement these requirements. They should consider a company’s ESG potential, risk management level, and disclosure quality during investment and financing processes. This makes it easier for high-quality SMEs to obtain financing. Consequently, it further enhances their ESG performance. Finally, financial institutions like banks and insurance companies should offer more supportive funding policies. These policies should support enterprises in enhancing new quality productive forces like digital transformation and green innovation. For example, they can simplify application procedures, provide low-interest loans, and ease financing restrictions. This creates a more favorable financing environment for firms. Such measures can alleviate financial pressure on technology R&D, equipment upgrades, and operational optimization. More importantly, they incentivize more companies to actively participate in green transition and digital transformation. This ultimately promotes sustainable development of the overall economy.

This study has some limitations. First, different rating agencies often issue ESG ratings based on varying standards and preferences. The lack of unified rating standard may affect the comparability of ESG ratings. Second, ESG ratings are categorized into broader standards, and researchers can utilize ESG scores as an alternative to ESG ratings in future studies. In addition, the research samples selected are Chinese A-share listed companies, non-listed companies are not considered. This may affect the universality of the study’s conclusions. Future research could focus on non-listed companies to address this limitation. For example, methodologies such as case studies, in-depth interviews, or utilizing limited specialized survey data could be employed for investigation.

Data availability statement

The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

Author contributions

YL: Data curation, Methodology, Software, Validation, Writing – original draft. RW: Conceptualization, Formal analysis, Funding acquisition, Supervision, Writing – review & editing.

Funding

The author(s) declared that financial support was received for this work and/or its publication. This work was supported by the Natural Science Foundation of China (72373073).

Acknowledgments

The authors are grateful for the comments from reviewers of this paper.

Conflict of interest

The author(s) declared that this work was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Generative AI statement

The author(s) declared that Generative AI was not used in the creation of this manuscript.

Any alternative text (alt text) provided alongside figures in this article has been generated by Frontiers with the support of artificial intelligence and reasonable efforts have been made to ensure accuracy, including review by the authors wherever possible. If you identify any issues, please contact us.

Publisher’s note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

References

Ali, W., Frynas, J. G., and Mahmood, Z. (2017). Determinants of corporate social responsibility (CSR) disclosure in developed and developing countries: a literature review. Corp. Soc. Responsib. Environ. Manag. 24, 273–294. doi: 10.1002/csr.1410

Crossref Full Text | Google Scholar

Alsayegh, M. F., Rahman, R. A., and Homayoun, S. (2020). Corporate economic, environmental, and social sustainability performance transformation through ESG disclosure. Sustainability 12:3910. doi: 10.3390/su12093910

Crossref Full Text | Google Scholar

Arayssi, M., Jizi, M., and Tabaja, H. H. (2020). The impact of board composition on the level of ESG disclosures in GCC countries. Sustain. Account. Manag. Policy J. 11, 137–161. doi: 10.1108/SAMPJ-05-2018-0136

Crossref Full Text | Google Scholar

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Adv. Strateg. Manag. 17, 99–120. doi: 10.1177/014920639101700108,

PubMed Abstract | Crossref Full Text | Google Scholar

Benito-Osorio, D., Colino, A., Guerras-Martín, L. Á., and Zúñiga-Vicente, J. Á. (2016). The international diversification-performance link in Spain: does firm size really matter? Int. Bus. Rev. 25, 548–558. doi: 10.1016/j.ibusrev.2015.09.004

Crossref Full Text | Google Scholar

Bissoondoyal-Bheenick, E., Brooks, R., and Do, H. X. (2023). ESG and firm performance: the role of size and media channels. Econ. Model. 121:106203. doi: 10.1016/j.econmod.2023.106203

Crossref Full Text | Google Scholar

Bolourian, S., Angus, A., and Alinaghian, L. (2021). The impact of corporate governance on corporate social responsibility at the board-level: a critical assessment. J. Clean. Prod. 291:125752. doi: 10.1016/j.jclepro.2020.125752

Crossref Full Text | Google Scholar

Branco, M. C., and Rodrigues, L. L. (2008). Social responsibility disclosure: a study of proxies for the public visibility of Portuguese banks. Br. Account. Rev. 40, 161–181. doi: 10.1016/j.bar.2008.02.004

Crossref Full Text | Google Scholar

Chang, Y. J., and Wang, S. (2024). A study on the impact of ESG rating on green technology innovation in enterprises: an empirical study based on informal environmental governance. J. Environ. Manag. 358:120878. doi: 10.1016/j.jenvman.2024.120878,

PubMed Abstract | Crossref Full Text | Google Scholar

Chen, F., Liu, Y.-h., and Chen, X.-z. (2024). ESG performance and business risk—empirical evidence from China's listed companies. Innov. Green Dev. 3:100142. doi: 10.1016/j.igd.2024.100142

Crossref Full Text | Google Scholar

Chen, S. M., Song, Y., and Gao, P. (2023). Environmental, social, and governance (ESG) performance and financial outcomes: analyzing the impact of ESG on financial performance. J. Environ. Manag. 345:118829. doi: 10.1016/j.jenvman.2023.118829,

PubMed Abstract | Crossref Full Text | Google Scholar

DasGupta, R. (2022). Financial performance shortfall, ESG controversies, and ESG performance: evidence from firms around the world. Financ. Res. Lett. 46:102487. doi: 10.1016/j.frl.2021.102487

Crossref Full Text | Google Scholar

DiMaggio, P. J., and Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review 48, 147–160. doi: 10.2307/2095101

Crossref Full Text | Google Scholar

Drempetic, S., Klein, C., and Zwergel, B. (2019). The influence of firm size on the ESG score: corporate sustainability ratings under review. J. Bus. Ethics 167, 333–360. doi: 10.1007/s10551-019-04164-1

Crossref Full Text | Google Scholar

Elia, V., Gnoni, M. G., and Tornese, F. (2017). Measuring circular economy strategies through index methods: a critical analysis. J. Clean. Prod. 142, 2741–2751. doi: 10.1016/j.jclepro.2016.10.196

Crossref Full Text | Google Scholar

Freeman, R. E. (1984). Strategic management: a stakholder approach. Journal of Management Studies, 29, 131–154.

Google Scholar

Gallego-Álvarez, I., García-Sánchez, I. M., and da Silva Vieira, C. (2013). Climate change and financial performance in times of crisis. Bus. Strat. Environ. 23, 361–374. doi: 10.1002/bse.1786

Crossref Full Text | Google Scholar

Gamerschlag, R., Möller, K., and Verbeeten, F. (2010). Determinants of voluntary CSR disclosure: empirical evidence from Germany. Rev. Manag. Sci. 5, 233–262. doi: 10.1007/s11846-010-0052-3

Crossref Full Text | Google Scholar

Garcia, A. S., Mendes-Da-Silva, W., and Orsato, R. J. (2017). Sensitive industries produce better ESG performance: evidence from emerging markets. J. Clean. Prod. 150, 135–147. doi: 10.1016/j.jclepro.2017.02.180,

PubMed Abstract | Crossref Full Text | Google Scholar

Gillan, S. L., Koch, A., and Starks, L. T. (2021). Firms and social responsibility: a review of ESG and CSR research in corporate finance. J. Corp. Finan. 66:101889. doi: 10.1016/j.jcorpfin.2021.101889,

PubMed Abstract | Crossref Full Text | Google Scholar

Gregory, R. P. (2024). The influence of firm size on ESG score controlling for ratings agency and industrial sector. J. Sustain. Financ. Invest. 14, 86–99. doi: 10.1080/20430795.2022.2069079

Crossref Full Text | Google Scholar

Gu, J. F. (2024). Investor attention and ESG performance: lessons from China's manufacturing industry. J. Environ. Manag. 355:120483. doi: 10.1016/j.jenvman.2024.120483,

PubMed Abstract | Crossref Full Text | Google Scholar

He, L., and Hou, T. (2010). Determinants of environmental performance information disclosure in Chinese listed companies: empirical evidence based on social responsibility reports. Chin. Popul. Resour. Environ., 20:99–104. (in Chinese). doi: 10.3969/j.issn.1002-2104.2010.08.018

Crossref Full Text | Google Scholar

Hirschey, M., Skiba, H., and Wintoki, M. B. (2012). The size, concentration and evolution of corporate R&D spending in U.S. firms from 1976 to 2010: evidence and implications. J. Corp. Financ. 18, 496–518. doi: 10.1016/j.jcorpfin.2012.02.002

Crossref Full Text | Google Scholar

Hörisch, J., Johnson, M. P., and Schaltegger, S. (2014). Implementation of sustainability management and company size: a knowledge-based view. Bus. Strateg. Environ. 24, 765–779. doi: 10.1002/bse.1844

Crossref Full Text | Google Scholar

Iwata, H., and Okada, K. (2011). How does environmental performance affect financial performance? Evidence from Japanese manufacturing firms. Ecol. Econ. 70, 1691–1700. doi: 10.1016/j.ecolecon.2011.05.010

Crossref Full Text | Google Scholar

Jones, T. M. (1995). Instrumental stakeholder theory: a synthesis of ethics and economics. Acad. Manag. Rev. 20, 404–437. doi: 10.2307/258852

Crossref Full Text | Google Scholar

Li, W., Padmanabhan, P., and Huang, C.-H. (2024). ESG and debt structure: is the nature of this relationship nonlinear? Int. Rev. Financ. Anal. 91:103027. doi: 10.1016/j.irfa.2023.103027

Crossref Full Text | Google Scholar

Lin, Y. T., Huang, R. T., and Yao, X. (2021). Air pollution and environmental information disclosure: an empirical study based on heavy polluting industries. J. Clean. Prod. 278:124313. doi: 10.1016/j.jclepro.2020.124313

Crossref Full Text | Google Scholar

Lourenço, I. C., and Branco, M. C. (2013). Determinants of corporate sustainability performance in emerging markets: the Brazilian case. J. Clean. Prod. 57, 134–141. doi: 10.1016/j.jclepro.2013.06.013,

PubMed Abstract | Crossref Full Text | Google Scholar

Miao, Z., Balezentis, T., Tian, Z. H., Shao, S., Geng, Y., and Wu, R. (2019). Environmental performance and regulation effect of China's atmospheric pollutant emissions: evidence from "three regions and ten urban agglomerations". Environ. Resour. Econ. 74, 211–242. doi: 10.1007/s10640-018-00315-6

Crossref Full Text | Google Scholar

Mitchell, R. K., Agle, B. R., and Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Acad. Manag. Rev. 22, 853–886. doi: 10.5465/amr.1997.9711022105

Crossref Full Text | Google Scholar

Okafor, A., Adeleye, B. N., and Adusei, M. (2021). Corporate social responsibility and financial performance: evidence from US tech firms. J. Clean. Prod. 292:126078. doi: 10.1016/j.jclepro.2021.126078

Crossref Full Text | Google Scholar

Panzar, J. C., and Willig, R. D. (1981). Economies of scope. Am. Econ. Rev. 71, 268–272. Available online at: http://www.jstor.org/stable/1815729

Google Scholar

Powell, D. M. W. (1983). The Iron cage revisited: institutional isomorphism and collective rationality in organizational fields. Am. Sociol. Rev. 48, 147–160. doi: 10.2307/2095101,

PubMed Abstract | Crossref Full Text | Google Scholar

Rossi, C., Byrne, J. G. D., and Christiaen, C. (2024). Breaking the ESG rating divergence: an open geospatial framework for environmental scores. J. Environ. Manag. 349:119477. doi: 10.1016/j.jenvman.2023.119477,

PubMed Abstract | Crossref Full Text | Google Scholar

Schumpeter, J.A. 2013 Capitalism, socialism and democracy London:Routledge.

Google Scholar

Song, H., Zhao, C. G., and Zeng, J. P. (2017). Can environmental management improve financial performance: an empirical study of A-shares listed companies in China. J. Clean. Prod. 141, 1051–1056. doi: 10.1016/j.jclepro.2016.09.105

Crossref Full Text | Google Scholar

Steffen, W., Richardson, K., Rockström, J., Cornell, S. E., Fetzer, I., Bennett, E. M., et al. (2015). Planetary boundaries: guiding human development on a changing planet. Science 347:1259855. doi: 10.1126/science.1259855,

PubMed Abstract | Crossref Full Text | Google Scholar

Uyar, A., Kilic, M., Koseoglu, M. A., Kuzey, C., and Karaman, A. S. (2020). The link among board characteristics, corporate social responsibility performance, and financial performance: evidence from the hospitality and tourism industry. Tour. Manag. Perspect. 35:100714. doi: 10.1016/j.tmp.2020.100714

Crossref Full Text | Google Scholar

Vilas, P., Andreu, L., and Sarto, J. L. (2022). Cluster analysis to validate the sustainability label of stock indices: an analysis of the inclusion and exclusion processes in terms of size and ESG ratings. J. Clean. Prod. 330:129862. doi: 10.1016/j.jclepro.2021.129862

Crossref Full Text | Google Scholar

Wang, Z., and Chu, E. (2024). Shifting focus from end-of-pipe treatment to source control: ESG ratings’ impact on corporate green innovation. J. Environ. Manag. 354:120409. doi: 10.1016/j.jenvman.2024.120409,

PubMed Abstract | Crossref Full Text | Google Scholar

Wang, S., and Esperança, J. P. (2023). Can digital transformation improve market and ESG performance? Evidence from Chinese SMEs. J. Clean. Prod. 419:137980. doi: 10.1016/j.jclepro.2023.137980

Crossref Full Text | Google Scholar

Xia, F., Hua, Y., and Zhang, B. (2023). Does non-compliance pay? Environmental violations and share prices in China. Corp. Soc. Responsib. Environ. Manag. 31, 1886–1904. doi: 10.1002/csr.2672

Crossref Full Text | Google Scholar

Zeng, J. S., and Jiang, S. (2024). Do state-owned institutional investors care more about ESG? Evidence from China. Financ. Res. Lett. 67:105865. doi: 10.1016/j.frl.2024.105865

Crossref Full Text | Google Scholar

Zhang, M., Wu, D., and Huang, G. C. (2024). Minimum wage level and corporate ESG performance. Financ. Res. Lett. 67:105783. doi: 10.1016/j.frl.2024.105783

Crossref Full Text | Google Scholar