Can Corporate Environmental Social Responsibility and Financial Performance Achieve a Win-win Situation in China? -From the Perspective of Executive Social Capital

Based on the new market corporate social responsibility theory, enterprises try their best to achieve a win-win situation between environmental social responsibility and corporate financial performance. This paper quantifies corporate environmental social responsibility from the perspective of enterprise front-end governance, back-end governance and employee green behavior, based on the data of Chinese A-share listed companies from 2010 to 2022. Return on assets is used to measure the corporate financial performance. Then, from the perspective of executive social capital, this paper explores the threshold effect of environmental social responsibility on financial performance and draws the following conclusions: (1) In the short term, corporate environmental social responsibility exerts a negative effect on financial performance by augmenting R&D investment. In the long term, corporate environmental social responsibility has a positive effect on financial performance by enhancing reputation or reducing financing costs; (2) Specifically, compared with employee green behavior, front-end and back-end governance have a notably substantial adverse effect on corporate financial performance; (3) When executive social capital crosses a specific threshold, the negative impact of corporate environmental social responsibility commitment on financial performance becomes insignificant. Consequently, this study suggests that bolstering executive social capital is essential for concurrently advancing corporate environmental social responsibility and financial performance.