ESG Performance and Corporate Trade Credit Financing
Financing is crucial for enterprises to survive and develop.Restricted by the difficulty of conventional financing channels,trade credit,an informal financing way,is favored by global enterprises.How to improve the ability of enterprises to obtain trade credit financing has become a hot issue for practice and academia.With the deepening of the concept of sustain-able development,enterprises'performance in the environment,society and corporate governance(ESG)is gradually integ-rated into the decision-making process by suppliers and customers.Therefore whether and how ESG performance affects trade credit financing is an issue worth exploring.Based on the samples of Chinese A-share listed companies from year 2009 to 2020,a multiple linear regression model is constructed to empirically investigate the impact of ESG performance on corporate trade credit financing,as well as the moder-ating effect of supply chain concentration,degree of industry competition and financial constraints.In further research,the study explores the underlying mechanisms by which ESG performance influences corporate trade credit financing from the per-spectives of information risk and financial risk,and investigates its economic consequences and the role of ESG performance in optimizing the structure of trade credit financing.To ensure the robustness of the findings,the study conducts robustness tests from diverse perspectives,including altering variable measurement techniques and leveraging the instrumental variable meth-od to mitigate potential endogeneity issues.The test results show that ESG performance is significantly positively correlated with trade credit financing scale,that is,the better the ESG performance of the company,the stronger the ability to obtain trade credit financing.Meanwhile,the posit-ive effect of ESG performance on trade credit financing is more pronounced for enterprises facing higher supply chain concen-tration,stronger industry competition and more financial constraints.After mechanism testing,we find that ESG performance is conducive to decreasing information risk and financial risk which alleviate the concerns of suppliers and customers about corporate risk and enhance the trust relationship among them,thus expanding trade credit financing scale.Further research shows that good ESG performance can also improve trade credit financing structure.And the economic consequences analysis indicates that ESG practices can enhance future business performance and corporate value after expanding trade credit finan-cing scale.Different from the traditional capital market situation,the study examines the economic consequences of ESG perform-ance from the perspective of trade credit financing in the commodity market.It finds that ESG performance expands trade cred-it financing scale through decreasing information risk and financial risk,and enriches the literature on the determinants of trade credit financing and the economic consequences of ESG performance.The research conclusions have important implications for enterprises attaching importance to ESG practices,stakeholders paying attention to ESG performance,and regulators im-proving ESG-related systems.
ESG performancetrade credit financinginformation riskfinancial risksupply chain concentrationdegree of in-dustry competitiondegree of financial constraints
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