Ming Yan

Type of the article: Research Article

Abstract
Firms worldwide are embracing ESG principles and strengthening their ESG performance to foster sustainable development. This study uses five years of data from China to examine the relationship between ESG performance and corporate financial performance (CFP), measured by ROE, and tests the moderating effects of analyst and media attention using both ordinary least squares (OLS) and the fixed-effects model (HD-FE). Regression analyses demonstrate that: (1) the ESG performance has a significantly positive effect on ROE (coefficient = 0.026, p < 0.01), and after lagged by one and two periods, the effect is sustained (coefficient = 0.019/0.018, p < 0.01). (2) Analyst attention negatively modulates the relationship between ESG and ROE (coefficient = –0.011, p < 0.01), and the relationships for CSR (coefficient = –0.002, p < 0.01) and CG (coefficient = –0.011/–0.012, p < 0.01), but can mitigate the negative effect of environmental protection (ENV) on ROE (coefficient = 0.002, p < 0.01). (3) Media attention shows no consistent moderating effect on ESG-ROE relationship (coefficient = –0.001, p > 0.10; coefficient = –0.001, p < 0.05), but after classifying by sentiment, positive and neutral media coverage significantly weakens the positive impact of ESG on ROE (coefficient = –0.004/–0.005, p < 0.01; coefficient = –0.003/–0.004, p < 0.05/0.01), while negative coverage strengthens it (coefficient = 0.003/0.002, p < 0.05/0.10). Therefore, to meet external regulatory or public expectations, firms should strive to disclose more detailed and reliable ESG information, while investors and other stakeholders should critically evaluate the information presented.