ESG disclosure quality and firm valuation under economic policy uncertainty: Evidence from Chinese A-share listed firms
Chia-Hsien Tang, Feifei Luo
TL;DR
This study shows that high-quality ESG disclosure helps Chinese companies reduce the negative impact of economic policy uncertainty on their market value.
Contribution
The paper reveals that ESG disclosure mitigates the adverse effects of economic policy uncertainty on firm valuation in emerging markets.
Findings
Economic policy uncertainty significantly reduces firm value in Chinese A-share listed companies.
High-quality ESG disclosure lessens the negative impact of economic policy uncertainty on firm valuation.
EPU reduces analyst coverage and increases financial distress, which are partially mediated through valuation channels.
Abstract
This study examines the extent to which high-quality environmental, social, and governance (ESG) disclosure mitigates the effects of economic policy uncertainty (EPU) on enterprises’ market valuation. The research indicates that utilizing panel data from Chinese A-share listed companies reveals that Economic Policy Uncertainty (EPU) significantly diminishes firm value, whereas robust Environmental, Social, and Governance (ESG) disclosure mitigates this adverse effect. Robustness checks employing alternative variable definitions and subsample analyses based on ownership type, area, and industry corroborate these findings. Mediation analysis indicates that the indirect effects, mediated through a valuation-based channel, reveal that EPU-induced reductions in business value diminish analyst coverage and exacerbate financial distress. These findings offer significant insights for corporate…
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Taxonomy
TopicsMarket Dynamics and Volatility · Corporate Finance and Governance · Auditing, Earnings Management, Governance