Research on the influence of capital market liberalization on the ESG performance of listed companies-A quasinatural experiment based on the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects

The Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect trading systems, which reflect important innovative policies of China's capital market reform, have attracted significant attention from both academia and practice concerning their economic consequences. The influence of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect systems on listed companies' ESG performance is empirically examined by constructing a difference-in-differences model and selecting data on A-share listed companies from 2009 to 2021. It is found that the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect systems significantly promote the ESG performance of listed companies, and this conclusion holds after robustness testing. This promoting effect is more pronounced in state-owned companies, and the external legal environment is an important safeguard for the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect systems to drive improvements in listed companies' ESG performance. An analysis of the continuity of capital market liberalization shows that the Shanghai-Hong Kong and ShenzhenHong Kong Stock Connect systems have expanded the breadth and depth of capital market liberalization following the QFII system, making the dividends from improved ESG performance more prominent. An analysis of the economic consequences shows that the liberalization of the capital market ultimately enhances corporate value by improving listed companies' ESG performance. Based on these findings, policy recommendations are proposed for different stakeholders to promote the practical application of ESG, advocate green investment concepts, and promote high-quality, sustainable development in China's economy.