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The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints

This study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we e...

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Main Authors: Zhao, Donghui, Wan Sallha, Yusoff, Mohd Fairuz, Md Salleh, Ngan, Sue Lin, Ainul Huda, Jamil, Mohd Juraij, Abd Rani, Mohd Shahidan, Shaari
Format: Article
Language:English
Published: Elsevier Ltd. 2025
Subjects:
HG Finance
Online Access:http://ir.unimas.my/id/eprint/47538/1/The%20impact%20of%20ESG%20and%20the%20institutional%20environment%20on%20investment%20efficiency%20in%20China%20through%20the%20mediators%20of%20agency%20costs%20and%20financial%20constraints.pdf
http://ir.unimas.my/id/eprint/47538/
https://www.sciencedirect.com/science/article/pii/S2590291125000506?ssrnid=4820210&dgcid=SSRN_redirect_SD
https://doi.org/10.1016/j.ssaho.2025.101323
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spelling my.unimas.ir-475382025-02-10T00:57:09Z http://ir.unimas.my/id/eprint/47538/ The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints Zhao, Donghui Wan Sallha, Yusoff Mohd Fairuz, Md Salleh Ngan, Sue Lin Ainul Huda, Jamil Mohd Juraij, Abd Rani Mohd Shahidan, Shaari HG Finance This study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we explore how ESG influences investment efficiency through the mediating roles of agency costs and financial constraints. Findings reveal that high ESG performance reduces agency costs and eases financial constraints, enhancing investment efficiency. Additionally, we assess the moderating effect of China's institutional environment, characterized by four indicators: marketization, financial development, government intervention, and regulatory quality. Results show that ESG's positive impact on investment efficiency is stronger in regions with more robust institutional frameworks. This study underscores the importance of adapting ESG strategies to varied institutional contexts, offering valuable insights for policymakers and corporate leaders seeking to promote sustainable growth across diverse regions. Elsevier Ltd. 2025-01 Article PeerReviewed text en http://ir.unimas.my/id/eprint/47538/1/The%20impact%20of%20ESG%20and%20the%20institutional%20environment%20on%20investment%20efficiency%20in%20China%20through%20the%20mediators%20of%20agency%20costs%20and%20financial%20constraints.pdf Zhao, Donghui and Wan Sallha, Yusoff and Mohd Fairuz, Md Salleh and Ngan, Sue Lin and Ainul Huda, Jamil and Mohd Juraij, Abd Rani and Mohd Shahidan, Shaari (2025) The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints. Social Sciences & Humanities Open, 11 (101323). pp. 1-11. ISSN 2590-2911 https://www.sciencedirect.com/science/article/pii/S2590291125000506?ssrnid=4820210&dgcid=SSRN_redirect_SD https://doi.org/10.1016/j.ssaho.2025.101323
institution Universiti Malaysia Sarawak
building Centre for Academic Information Services (CAIS)
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaysia Sarawak
content_source UNIMAS Institutional Repository
url_provider http://ir.unimas.my/
language English
topic HG Finance
spellingShingle HG Finance
Zhao, Donghui
Wan Sallha, Yusoff
Mohd Fairuz, Md Salleh
Ngan, Sue Lin
Ainul Huda, Jamil
Mohd Juraij, Abd Rani
Mohd Shahidan, Shaari
The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
description This study examines the impact of environmental, social, and governance (ESG) performance on corporate investment efficiency in China, focusing on underexplored dynamics in emerging markets. Using data from 3380 non-financial Chinese firms (2010–2021) and a fixed-effects panel regression model, we explore how ESG influences investment efficiency through the mediating roles of agency costs and financial constraints. Findings reveal that high ESG performance reduces agency costs and eases financial constraints, enhancing investment efficiency. Additionally, we assess the moderating effect of China's institutional environment, characterized by four indicators: marketization, financial development, government intervention, and regulatory quality. Results show that ESG's positive impact on investment efficiency is stronger in regions with more robust institutional frameworks. This study underscores the importance of adapting ESG strategies to varied institutional contexts, offering valuable insights for policymakers and corporate leaders seeking to promote sustainable growth across diverse regions.
format Article
author Zhao, Donghui
Wan Sallha, Yusoff
Mohd Fairuz, Md Salleh
Ngan, Sue Lin
Ainul Huda, Jamil
Mohd Juraij, Abd Rani
Mohd Shahidan, Shaari
author_facet Zhao, Donghui
Wan Sallha, Yusoff
Mohd Fairuz, Md Salleh
Ngan, Sue Lin
Ainul Huda, Jamil
Mohd Juraij, Abd Rani
Mohd Shahidan, Shaari
author_sort Zhao, Donghui
title The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
title_short The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
title_full The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
title_fullStr The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
title_full_unstemmed The impact of ESG and the institutional environment on investment efficiency in China through the mediators of agency costs and financial constraints
title_sort impact of esg and the institutional environment on investment efficiency in china through the mediators of agency costs and financial constraints
publisher Elsevier Ltd.
publishDate 2025
url http://ir.unimas.my/id/eprint/47538/1/The%20impact%20of%20ESG%20and%20the%20institutional%20environment%20on%20investment%20efficiency%20in%20China%20through%20the%20mediators%20of%20agency%20costs%20and%20financial%20constraints.pdf
http://ir.unimas.my/id/eprint/47538/
https://www.sciencedirect.com/science/article/pii/S2590291125000506?ssrnid=4820210&dgcid=SSRN_redirect_SD
https://doi.org/10.1016/j.ssaho.2025.101323
_version_ 1825166840757747712
score 13.244413

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