Does firm internationalization improve ESG performance? Evidence from China

Zhou, Jing; Wu, Kaiwen; Li, Youwei

Abstract

Amidst the current era of economic globalization, the internationalization of emerging market firms (EMFs) and their sustainable development are increasingly prominent. Environmental, Social, and Governance (ESG) has received widespread attention as an important indicator of sustainability. Using a sample from Chinese A-share listed companies spanning from 2012 to 2022, this study employs a difference-in-differences (DID) model to explore whether firms' outward foreign direct investment (OFDI) impacts their ESG performance. The results indicate that firms with OFDI have a higher level of ESG performance than those without, especially in the domain of environmental protection. This positive impact of OFDI on ESG performance is found to be strengthened by stronger CEO clan culture background but is weakened by higher financing constraints of firms. Our findings offer valuable insights for internationally operating EMFs, highlighting the importance of ESG practices in promoting sustainable development.

Citation

Zhou, J., Wu, K., & Li, Y. (2025). Does firm internationalization improve ESG performance? Evidence from China. International Review of Economics and Finance, 101, Article 104168. https://doi.org/10.1016/j.iref.2025.104168

• Journal Article Type: Article
• Acceptance Date: May 9, 2025
• Online Publication Date: May 16, 2025
• Publication Date: 2025-07
• Deposit Date: May 12, 2025
• Publicly Available Date: May 19, 2025
• Print ISSN: 1059-0560
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 101
• Article Number: 104168
• DOI: https://doi.org/10.1016/j.iref.2025.104168
• Public URL: https://hull-repository.worktribe.com/output/5175130
• Additional Information: This article is maintained by: Elsevier; Article Title: Does firm internationalization improve ESG performance? Evidence from China; Journal Title: International Review of Economics & Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.iref.2025.104168; Content Type: article; Copyright: © 2025 Published by Elsevier Inc.