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3549Entering the new stage of development, China has actively promoted the construction of ESG in the implementation of the new development concept, and promoted the sustainable development of the economy. In this context, exploring the value creation effect of ESG performance has important practical significance for further promoting the high-quality development of China’s economy. As a token of sustainable development and a major part of non-financial information, will good ESG performance significantly improve accounting earnings value relevance? The answer to this question will help to understand the application logic of enterprise ESG performance in the capital market, and enrich the research on financial information, non-financial information and resource allocation in the capital market.
This paper attempts to answer the above question. The study finds that enterprise ESG performance significantly improves accounting earnings value relevance. The mechanism test shows that ESG performance improves accounting earnings value relevance through the three mechanisms of capacity transformation, information transmission and corporate reputation. In addition, the study also finds that, ESG performance can improve the value relevance of sustainable earnings and non-sustainable earnings, but it has a stronger effect on the value relevance of the former, and the improvement effect of ESG performance on earnings value relevance only exists in profitable enterprises.
The conclusions show that, ESG performance can be transformed into the internal growth power of enterprises to reduce operational risks and improve the sustainable operation ability and risk management ability of enterprises. At the same time, ESG performance can effectively improve earnings value relevance only on the basis of profitability. This means that, when carrying out ESG practice, enterprises should pay more attention to the development of main businesses, enhance the profitability of core businesses, and make financial performance and ESG performance go hand in hand. In addition, government departments should strengthen the regulation and guidance of ESG practices, improve the scope and quality of ESG information disclosure, and make ESG performance truly serve the high-quality development of the economy.
The marginal contribution of this paper lies in that: First, it analyzes the economic consequences of ESG performance from the perspective of financial information, which is an important supplement to the literature in the ESG field. Second, it supplements the literature on the factors affecting earnings value relevance from the perspective of non-financial information, providing empirical evidence for understanding the synergy between financial and non-financial information, and important enlightenment on how to improve earnings value relevance and promote the healthy development of the capital market.
