Against the backdrop of growing attention to the concepts of sustainable development and green development, a firm's Environmental, Social, and Governance (ESG) performance has increasingly become a critical factor in its development. Based on panel data of domestic Shanghai and Shenzhen A-share listed companies from 2011 to 2022, this paper uses a fixed-effects model to explore the impact of corporate financial performance on ESG performance and its mechanism. The study finds that financial performance significantly influences ESG performance to a certain extent, and mechanism tests reveal that this impact varies across industries and firm sizes. Accordingly, this research puts forward targeted policy recommendations to provide a reference for corporate managers in strategy formulation, investors in decision-making, and regulatory authorities in policy improvement, thereby helping enterprises achieve the synergistic enhancement of financial performance and ESG performance and promoting the sustainable development of capital markets.
Maggie Chuoyan Dong (Mon,) studied this question.