Abstract
In the context of carbon peaking and carbon-neutral target, enterprises need to adjust their resource allocation and practice environmental, social, and governance (ESG) activities. Previous literature ignores the resources and costs that enterprises may consume to improve ESG ratings, leading to an unclear relationship between ESG ratings and trade credit. We investigate how ESG ratings affect trade credit using the inverted U-shaped (U-shaped) moderating effect regression model. The result shows that ESG ratings have an inverted U-shaped relationship with trade credit. Information transparency moderates the curvilinear relationship between ESG ratings and trade credit, with higher information transparency flattening the shape of the inverted U-shaped curve and moving the inflection point to the left. Executives with overseas backgrounds significantly moderate the inverted U-shaped relationship between ESG ratings and trade credit. Executives with overseas backgrounds flatten the inverted U-shaped relationship, and the inflection point shifts to the right. Overall, our findings show that higher ESG ratings do not help enterprises to expand trade credit in emerging market countries. Higher ESG ratings consume more corporate resources and are more likely to become a tool for management self-interest.
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Notes
Hexun ESG ratings reflect the ESG ratings of Chinese listed firms via an objective and comprehensive approach.
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Funding
This study was funded by the National Natural Science Foundation of China (No.71262014;72062029) and Philosophy and Social Science Cultivation Project of Xinjiang University (No.22APY006).
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Hui Zheng: Methodology, Formal analysis, Writing–original draft, Writing–review and editing. Wumaierjiang Aishan: Resources, Writing–review and editing, Funding acquisition.
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Hui Zheng and Wumaierjiang Aishan contributed equally to the reaearch and should be regared as co-first author.
Appendix
Appendix
Abbreviation | Complete spelling |
|---|---|
ESG | Environmental, social and governance |
CSR | Corporate social responsibility |
CEO | Chief executive officer |
CSMAR | China Stock Market and Accounting Research Database |
OLS | Ordinary least square method |
FE | Fixed effects |
GMM | Generalized method of moments |
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Zheng, H., Aishan, W. ESG ratings and trade credit: inverted U-shaped moderating role of information transparency and executives with overseas backgrounds. Environ Sci Pollut Res 30, 78554–78568 (2023). https://doi.org/10.1007/s11356-023-27729-0
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DOI: https://doi.org/10.1007/s11356-023-27729-0