Corruption at country and corporate levels: impacts on environmental, social and governance (ESG) performance of Chinese listed firms

Abstract

Purpose

As a consequence of the proposal of the Carbon Neutral and Carbon Peak policy in 2020, the Chinese Government is paying more attention to developing sustainability performance. This study aims to assess the direct influence of country-level and corporate anti-corruption measures on environmental, social and governance (ESG) and its three dimensions, besides ascertaining the moderating role of firm size.

Design/methodology/approach

This study used the system generalized method of moments on a sample of 820 Chinese listed firms from 2012 to 2021.

Findings

The findings show that country-level and corporate corruption negatively affect ESG performance. Corporate anti-corruption measures have a more pronounced positive influence on the sustainability performance of small firms than large firms due to the limited resources, lower political position and weaker refusal power of small firms.

Research limitations/implications

The study has great implications for governments, corporate boards and ESG rating agencies. Government and corporate boards should mitigate the risks of country-level and corporate corruption to attain sustainable development goals. Rating agencies should add country-level and corporate corruption into the ESG evaluation system.

Originality/value

Some empirical results have proven that anti-corruption measures help reduce the emission of carbon dioxide, but few evidence shows how country-level and corporate corruption affect ESG and its three dimensions.

Citation

Wei, H., Mohd-Rashid, R. and Ooi, C.-A. (2024), "Corruption at country and corporate levels: impacts on environmental, social and governance (ESG) performance of Chinese listed firms", Journal of Money Laundering Control, Vol. 27 No. 3, pp. 559-578. https://doi.org/10.1108/JMLC-06-2023-0102