Does ESG Performance Have an Impact on Financial Performance? Moderating Effect of Firm Nature

This chapter examines the relationship between corporate financial performance and environmental, social, and governance (ESG) performance, as well as the moderating effect of firm ownership on this relationship. Utilizing data from Chinese A-share listed companies from 2014 to 2020, the study employs a fixed-effect model to conduct an empirical regression analysis addressing the research questions. The financial performance of companies is quantified using economic value added (EVA), while ESG scores are sourced from the Bloomberg database. To mitigate potential endogeneity issues, the study applies the Heckman two-stage model and performs robustness tests using the computer, communication, and electronic equipment manufacturing industry. The empirical findings indicate a significant positive effect of ESG performance on corporate financial performance. Moreover, the study reveals that non-state-owned enterprises exhibit a stronger positive relationship between ESG performance and financial performance compared to state-owned enterprises. The consistency of the endogeneity and robustness tests with the main results corroborates the robustness of these findings. This research contributes to the literature by elucidating the positive impact of ESG on corporate financial performance and addressing the moderating role of firm ownership in this relationship. © 2025 selection and editorial matter, Tarek Rana, Md Jahidur Rahman and Peter Öhman; individual chapters, the contributors.