Main results
| Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
|---|---|---|---|---|---|
| Dependent variable | Composite measure of ESG | Composite measure of ESG | Environmental performance | Social performance | Governance performance |
| Independent variables | |||||
| Formal institution | 1.6226† (0.8849) | 3.4679** (1.0994) | 1.7594 (1.1229) | −1.4321 (0.8725) | |
| Informal institution | 4.4092*** (0.6732) | 4.1902*** (0.8469) | 2.4772** (0.8579) | 6.2010*** (0.6485) | |
| Financial market institution | 1.1884* (0.5514) | 0.1927 (0.7092) | 1.1616 (0.7079) | 1.8820*** (0.5105) | |
| Country-level control variables | |||||
| GDP growth | −0.1038 (0.1062) | −0.0530 (0.1078) | −0.1204 (0.1403) | 0.1100 (0.1389) | −0.1665† (0.0983) |
| Population (log) | −2.6793 (1.8338) | 0.1266 (1.5334) | 3.1134† (1.6509) | 0.7898 (1.8471) | −6.1543** (2.3391) |
| Unemployment rate | 0.1474 (0.0955) | 0.3704*** (0.1054) | 0.6788*** (0.1348) | 0.3192* (0.1351) | 0.0310 (0.0987) |
| FDI net inflow (log) | −0.6301** (0.2079) | −0.8508*** (0.2112) | −1.0436*** (0.2750) | −1.0691*** (0.2722) | −0.4768* (0.1924) |
| Size of land (log) | 1.3214 (1.3120) | 1.0901 (1.0370) | −0.4667 (1.0878) | 0.7370 (1.2384) | 4.2258* (1.6685) |
| Labor market efficiency | −0.4188** (0.1385) | −0.3872** (0.1384) | −0.5532** (0.1805) | −0.5200** (0.1784) | −0.1030 (0.1259) |
| Firm-level control variables | |||||
| Return on assets | 0.0386*** (0.0109) | 0.0389*** (0.0109) | 0.0348* (0.0143) | 0.0636*** (0.0141) | 0.0184† (0.0099) |
| Total asset | 0.0275*** (0.0007) | 0.0275*** (0.0007) | 0.0341*** (0.0009) | 0.0317*** (0.0009) | 0.0167*** (0.0006) |
| Debt ratio | 0.0130† (0.0073) | 0.0121† (0.0073) | 0.0364*** (0.0096) | −0.0146 (0.0094) | 0.0147* (0.0066) |
| Foreign sales to total sales | 0.0097*** (0.0014) | 0.0097*** (0.0014) | 0.0110*** (0.0018) | 0.0124*** (0.0018) | 0.0055*** (0.0012) |
| Constant | 82.5017*** (22.4954) | 42.7191* (19.3489) | 17.1442 (21.2458) | 47.6597* (23.4577) | 93.6230** (28.6712) |
| Log of random-effects parameter | 2.6012*** (0.1127) | 2.3556*** (0.1167) | 2.3939*** (0.1168) | 2.5298*** (0.1153) | 2.8579*** (0.1123) |
| Number of observations | 25,233 | 25,233 | 25,233 | 25,233 | 25,233 |
| Log-likelihood | −112,346.08 | −112,321.53 | −119,083.55 | −118,752.19 | −109,847.80 |
| AIC | 224,760.16 | 224,717.07 | 238,241.10 | 237,578.39 | 219,769.61 |
| Model (1) | Model (2) | Model (3) | Model (4) | Model (5) | |
|---|---|---|---|---|---|
| Dependent variable | Composite measure of | Composite measure of | Environmental performance | Social performance | Governance performance |
| Formal institution | 1.6226† (0.8849) | 3.4679 | 1.7594 (1.1229) | −1.4321 (0.8725) | |
| Informal institution | 4.4092 | 4.1902 | 2.4772 | 6.2010 | |
| Financial market institution | 1.1884 | 0.1927 (0.7092) | 1.1616 (0.7079) | 1.8820 | |
| −0.1038 (0.1062) | −0.0530 (0.1078) | −0.1204 (0.1403) | 0.1100 (0.1389) | −0.1665† (0.0983) | |
| Population (log) | −2.6793 (1.8338) | 0.1266 (1.5334) | 3.1134† (1.6509) | 0.7898 (1.8471) | −6.1543 |
| Unemployment rate | 0.1474 (0.0955) | 0.3704 | 0.6788 | 0.3192 | 0.0310 (0.0987) |
| −0.6301 | −0.8508 | −1.0436 | −1.0691 | −0.4768 | |
| Size of land (log) | 1.3214 (1.3120) | 1.0901 (1.0370) | −0.4667 (1.0878) | 0.7370 (1.2384) | 4.2258 |
| Labor market efficiency | −0.4188 | −0.3872 | −0.5532 | −0.5200 | −0.1030 (0.1259) |
| Return on assets | 0.0386 | 0.0389 | 0.0348 | 0.0636 | 0.0184† (0.0099) |
| Total asset | 0.0275 | 0.0275 | 0.0341 | 0.0317 | 0.0167 |
| Debt ratio | 0.0130† (0.0073) | 0.0121† (0.0073) | 0.0364 | −0.0146 (0.0094) | 0.0147 |
| Foreign sales to total sales | 0.0097 | 0.0097 | 0.0110 | 0.0124 | 0.0055 |
| Constant | 82.5017 | 42.7191 | 17.1442 (21.2458) | 47.6597 | 93.6230 |
| Log of random-effects parameter | 2.6012 | 2.3556 | 2.3939 | 2.5298 | 2.8579 |
| Number of observations | 25,233 | 25,233 | 25,233 | 25,233 | 25,233 |
| Log-likelihood | −112,346.08 | −112,321.53 | −119,083.55 | −118,752.19 | −109,847.80 |
| 224,760.16 | 224,717.07 | 238,241.10 | 237,578.39 | 219,769.61 |
Year and industry fixed effects are included but are not reported here. Multilevel regression with random intercept modelling is used to estimate the results. Standard errors are in parentheses. ***p < 0.001, ** p < 0.01, *p < 0.05, †p < 0.10. All explanatory and control variables are lagged by One year to minimize the endogeneity concern. AIC = Akaike information criterion
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