Environmental, Social, and Governance Performance and Enterprise Dynamic Financial Behavior: Evidence from Panel Vector Autoregression

This research applies panel vector autoregression method (PVAR) to analyze the annual panel data of Chinese A-share listed companies over the period 2009–2020, to study the relationship between enterprise ESG performance and enterprise dynamic financial behavior, by using Sino-Securities' ESG performance data. The main findings of the research include: first, there is a positive interaction between investment and ESG performance. Second, financial factors (e.g., cash flow) have a positive effect on ESG performance, while ESG performance has a positive effect to fundamental factors (e.g., sales revenue). The above significant effects are maintained mainly in enterprises with low ESG performance. Third, the sensitivity of investment-cash flow with low ESG performance form is significant.