The Relevance of Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) and the Impact of the Chinese Government Recommending Companies to Disclose ESG Ratings since 2016, based on the Data of Chinese A-share Companies

Abstract

Since the concept of corporate social responsibility (CSR) was put forward, many companies globally have achieved environmental, social, and governance (ESG) disclosure. This article will mainly focus on the 2011-2020 corporate data regression analysis among Chinese A-share listed companies that meet the sampling conditions, using return on assets (ROA) and return on equity (ROE) as indicators of corporate financial performance and use A-share listed company ESG rating data as an indicator of CSR for analysis. Through the analysis results of the fixed-effects model, for the same company, increasing the ESG level will lead to a decrease in corporate financial performance. However, by dividing the ESG rating data into high and low two groups, the results of multiple regression analysis found that companies with higher ESG ratings have significantly higher corporate financial performance than companies who have lower ESG ratings. In addition, since Chinese companies have only begun to disclose ESG rating data since 2016, this article uses logistic regression to study whether companies’ disclosure of ESG will impact corporate financial performance. The regression analysis results show that companies’ disclosure of ESG rating data positively affects corporate financial performance.