November 15, 2025SustainabilityOpen Access

Non-Financial Factors and Financial Returns: The Impact of Linking ESG Metrics to Executive Compensation on Corporate Financial Performance

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Analysis shows ESG compensation enhances financial performance in corporations, indicating a link to value creation.

ESG compensation significantly improves financial performance, enhancing corporate value creation.
Key metrics include increased ESG ratings and reduced transaction costs aligning with executive compensation.
Employing deep learning models, the study analyzes a large sample of Chinese listed companies for insights.
Identifying managerial ability and financial slack strengthens the positive effects of ESG compensation.

Ding et al. (2025) studied this question.

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