Navigating ESG Disagreement: Effects on Corporate Green Innovation in China
DOI:
https://doi.org/10.62051/mkaq6r19Keywords:
ESG Rating Divergence; Green Innovation; Financing Constraints; Mediating Effect; Heterogeneity Analysis.Abstract
ESG performance is a key non-financial metric for corporate sustainability, yet significant rating divergence exists across agencies due to methodological and contextual differences. Using 2010–2021 panel data of Chinese A-share listed firms, this study examines ESG rating divergence's impact on corporate green innovation (proxied by green patent grants) and the mediating role of financing constraints (measured via the SA Index). ESG rating divergence is calculated as the standard deviation of standardized scores from five agencies. Results confirm a significant negative relationship between ESG rating divergence and green innovation. Financing constraints partially mediate this link: divergence exacerbates information asymmetry, reduces capital allocation efficiency, and weakens policy support, tightening constraints and indirectly inhibiting green innovation. The inhibitory effect is more pronounced for high-pollution and high-tech firms This study enriches ESG and corporate innovation literature by uncovering the underlying micro-mechanism, offering policy implications for standardizing ESG rating frameworks, improving green finance systems, and enhancing corporate ESG management to reduce divergence and boost green innovation
Downloads
References
[1] Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate confusion: The divergence of ESG ratings. Review of Finance, 26(6), 1315-1344.
[2] Christensen, D. M., Serafeim, G., & Sikochi, A. (2022). Why is corporate virtue in the eye of the beholder? The case of ESG ratings. The Accounting Review, 97(1), 147-175.
[3] Pedersen, L. H., Fitzgibbons, S., & Pomorski, L. (2021). Responsible investing: The ESG-efficient frontier. Journal of financial economics, 142(2), 572-597.
[4] Delmas, M. A., & Burbano, V. C. (2011). The drivers of greenwashing. California management review, 54(1), 64-87.
[5] Hottenrott, H., & Peters, B. (2012). Innovative capability and financing constraints for innovation: more money, more innovation?. Review of Economics and Statistics, 94(4), 1126-1142.
[6] Flammer, C. (2021). Corporate green bonds. Journal of financial economics, 142(2), 499-516.
[7] Zheng, J., Khurram, M. U., & Chen, L. (2022). Can green innovation affect ESG ratings and financial performance? Evidence from Chinese GEM listed companies. Sustainability, 14(14), 8677.
[8] Zhu, Y., Yang, H., & Zhong, M. (2023). Do ESG ratings of Chinese firms converge or diverge? A comparative analysis based on multiple domestic and international ratings. Sustainability, 15(16), 12573.
[9] Hadlock, C. J., & Pierce, J. R. (2010). New evidence on measuring financial constraints: Moving beyond the KZ index. The review of financial studies, 23(5), 1909-1940.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Transactions on Economics, Business and Management Research
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
