How does environmental regulatory stringency shape ESG? Evidence from cross-listing

Authors

Qiang JI, Institutes of Science and Development, Chinese Academy of Sciences, Beijing 100190, China School of Public Policy and Management, University of Chinese Academy of Sciences, Beijing 100049, ChinaFollow

Document Type

Research-Article

Author

Rufei Ma, Yuhua Chen, Qiang Ji, Pengxiang Zhai

Journal Name

International Review of Financial Analysis

Keywords

Cross-listing, Environmental regulatory stringency, ESG, Reputational bonding

Abstract

This paper investigates whether and how the regulatory environment shapes firm-level ESG performance. Using a sample of firms cross-listed in the Chinese mainland and the Hong Kong China stock markets, we find that a stricter regulatory framework brings better firm-level ESG performance. This positive impact on ESG performance is more profound in firms with higher degrees of reputational pressure, which supports the reputational bonding hypothesis. We also find that the Hong Kong China market demonstrates stronger ESG endorsement for cross-listed firms. In general, our findings highlight the importance of a stringent regulatory environment and justify regulatory modifications in regions that do not yet mandate ESG disclosure. © 2025 Elsevier Inc.

https://doi.org/10.1016/j.irfa.2025.104316

Recommended Citation

JI, Qiang (2025) "How does environmental regulatory stringency shape ESG? Evidence from cross-listing," Double Helix Methodology: Vol. 6: Iss. 6, Article 9.
Available at: https://diis-mips.researchcommons.org/helix-content/vol6/iss6/9