Impact of ESG Performance on Firm Value and Its Transmission Mechanism: Research Based on Industry Heterogeneity

Since the basic framework of ESG disclosure was established by CSRC in The Governance Guidelines for Listed Companies in 2018, China’s ESG system has been improved markedly. The disclosure of ESG helps to encourage market participants to pay attention to the impact of economic behavior on environment and society, and eventually promote the pluralistic development of society spontaneously. The findings suggest that overall ESG combined score has a significant and positive relationship with the listed companies in the four industries-energy industry, industrial industry, consumer discretionary industry and healthcare industry. Besides, the results show that for most industries (expect materials industry, consumer staple industry, and utilities industry), the long-term impact is slightly higher than that in the short term, indicating that firms can enhance their competitiveness and increase their value through ESG investment. From the perspective of ESG indexes, firms, investors and regulatory authorities, this paper concludes that all market participants should play a role in building ESG system; firms are supposed to emphasize ESG management in their daily business activities; investors can consider ESG performance more and deepen the concept of value investment; regulatory authorities are expected to create a proper environment for ESG construction and establish sounder ESG disclosure rules.