The impact of executives' green experience on environmental, social, and governance (ESG) performance: Evidence from China

Abstract

Corporate Environmental, Social, and Governance (ESG) performance reflects the alignment of firms with national strategies and macroeconomic development principles, and serves as a crucial foundation for achieving sustainable development. Investigating the factors driving corporate ESG performance has significant theoretical and practical implications. This study utilizes data from Shanghai and Shenzhen A-share listed companies in China from 2010 to 2022 and theoretically analyzes and empirically tests the effects and mechanisms of executives' green experience on overall ESG performance and performance on each element of ESG. The results indicate that executives' green experience enhances the efficiency of corporate green patent innovation, thereby improving environmental performance. In addition, green experiences foster environmental investment and charitable donations, leading to better social performance. Executives with green experience also attract green investors and analysts' attention, thereby improving corporate governance and ultimately positively affecting overall corporate ESG performance. The robustness of these findings is confirmed through alternative variable measurements, Propensity Score Matching(PSM) Tests, Entropy Balancing Tests, Instrumental Variable Tests, and controlling for the impact of significant public health events. Further analysis revealed that the positive effects of executives' green experiences on corporate ESG performance are more pronounced in non-heavily polluting corporations, non-state-owned corporations, and firms where executives have higher power. This study enriches research on the consequences of executives' green experiences and the determinants of corporate ESG performance, extending the boundaries of how executive characteristics influence micro-level corporate outcomes. It also provides valuable references for regulatory bodies promoting ESG practices and decision-making by capital market participants.

Keywords: Analysts' attention; Charitable donations; Corporate ESG performance; Environmental investment; Executive green experience; Green investors; The efficiency of green patent innovation.