The effect and mediating mechanism of environmental, social, and governance information disclosure on sustainable growth rate: evidence from China

The framework of ESG (Environmental, Social, and Governance) is intrinsically linked to the principle of sustainable growth. Despite this alignment, the impact of ESG information disclosure on corporate sustainability remains a subject of debate. Drawing on signaling theory, we examine the impact of ESG information disclosure on the sustainable growth rate within the Chinese context, while also investigating the mediating roles of corporate reputation and financing constraints. Utilizing 9629 unbalanced panel observations from 1133 publicly listed firms in China spanning 2011 to 2020, we find that the overall ESG information disclosure significantly enhances the sustainable growth rate. The mechanisms driving this enhancement are identified as improved corporate reputation and alleviated financial constraints. Further tests reveal that the mediating role of corporate reputation is effective in the environmental and social responsibility sub-dimensions, while the mechanism of financial constraint reduction is only effective in the social responsibility sub-dimension.