The influence of enterprise ESG performance on overseas business income - Evidence from China

As an emerging information disclosure system, enterprise ESG performance holds substantial importance for the international expansion of Chinese enterprises. Nevertheless, there is a paucity of literature examining the relationship between the ESG performance of Chinese enterprises and their overseas business income. This research utilizes data from Chinese A-share listed companies spanning from 2009 to 2022 to explore the causal link between ESG performance and overseas business income. The findings reveal that superior ESG performance markedly enhances overseas business income. The primary conclusions remain robust after addressing endogeneity and performing robustness checks. The empirical results suggest that strong ESG performance can transmit non-financial information to consumers and host countries, offering a more comprehensive understanding of the enterprise's operations, reducing information barriers, and facilitating increased overseas business income. Furthermore, this paper delves into the mechanisms through which ESG performance impacts overseas business income. Specifically, ESG performance fosters overseas business income by mitigating financing constraints, circumventing operational risks, and bolstering product competitiveness. Heterogeneity analysis indicates that the positive impact of ESG performance on overseas business income is significant for lowpollution enterprises, non-state-owned enterprises, and enterprises in the growth and maturity stages. Additionally, heterogeneity analysis based on international market ESG preferences reveals that this positive effect is more pronounced in regions with higher international ESG preferences. This research enriches the understanding of how enterprise ESG performance influences business operations, offering policy implications for the international expansion of Chinese enterprises and the facilitation of domestic and international dual circulation.