ESG rating disagreement and corporate innovation: Evidence from China

This paper examines the impact of ESG rating disagreement on corporate innovation using data on Chinese listed firms from 2010 to 2021. We robustly find that ESG rating disagreement significantly reduces corporate innovation. Further research reveals that ESG rating disagreement can impede corporate innovation by amplifying firms' financing constraints and diminishing their human capital. In addition, the dampening effect of ESG rating disagreement on corporate innovation is more pronounced among firms with higher ESG ratings. The research in this paper holds importance for a more comprehensive and objective understanding of ESG rating disagreement.