THE ROLE OF ESG PERFORMANCE IN REDUCING STOCK PRICE CRASH RISK: EVIDENCE FROM CHINA’S A-SHARE MARKET
DOI:
https://doi.org/10.18623/rvd.v22.n3.3439Palavras-chave:
ESG, Stock Price Crash Risk, Digital Transformation, Corporate Financial Performance, China’s A-Share MarketResumo
In recent years, stock price crashes have frequently occurred in China’s capital market, undermining investor confidence and threatening market stability. Identifying the determinants and preventive mechanisms of stock price crashes has become a critical research priority. In this context, the impact of Environmental, Social, and Governance (ESG) performance on stock price crash risk has attracted increasing attention from both academics and practitioners. Grounded in information asymmetry theory, agency theory, signaling theory, and stakeholder theory, this study investigates the relationship between corporate ESG performance and stock price crash risk. It further examines the moderating effect of digital transformation and the mediating role of corporate financial performance, measured by return on assets (ROA). The analysis is based on 16,297 firm-year observations from A-share listed companies during 2018-2023, with regressions controlling for industry and year fixed effects. The empirical results indicate that ESG performance significantly reduces the likelihood of stock price crashes, digital transformation strengthens this effect, and financial performance partially mediates the link between ESG and stock crash risk. These findings deepen the understanding of how ESG influences market stability and offer practical insights for promoting sustainable and transparent capital markets in emerging economies such as China.
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