Table 4 Two-stage instrumental variable...

Table 4

Two-stage instrumental variable regression (2SLS) and other robustness tests

	First stage of 2SLS	Second stage of 2SLS	Alternate ESG measure with LSEG ESG	Alternate ESG measure with CNRDS ESG	Alternate PPI measure	Controlling for Hofstede’s cultural dimensions	Controlling for board cultural diversity	Ruling out the impacts of geographic operational or sales exposure
	Dependent variable: PPI_i,t-1	Dependent variable: ESG_i,t	Dependent variable: ESG_Alt1_i,t	Dependent variable: ESG_Alt2_i,t	Dependent variable: ESG_i,t	Dependent variable: ESG_i,t	Dependent variable: ESG_i,t	Dependent variable: ESG_i,t
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Constant	−3.675***	6.437***	−1.053***	4.306***	−1.025***	3.911***	3.916***	3.969***
Constant	(−242.980)	(5.676)	(−23.373)	(9.237)	(−24.589)	(130.077)	(129.922)	(88.856)
Policy_i,t-1	0.001***
Policy_i,t-1	(3.170)
Predicted_PPI_i,t-1		0.711**
Predicted_PPI_i,t-1		(2.274)
PPIAlt_i,t-1					0.186***
PPIAlt_i,t-1					(4.344)
PPI_i,t-1			0.202***	0.546***		0.014**	0.015**	0.021**
PPI_i,t-1			(4.427)	(5.544)		(2.068)	(2.233)	(2.291)
PDI_i,t-1						−0.002
PDI_i,t-1						(−0.991)
IDV_i,t-1						−0.001
IDV_i,t-1						(−0.785)
MAS_i,t-1						0.011***
MAS_i,t-1						(2.707)
UAI_i,t-1						−0.003**
UAI_i,t-1						(−2.369)
B_Cultural_Diversity							−0.003***
B_Cultural_Diversity							(−3.394)
Duality_i,t-1	0.010***	−0.009**	0.000	−0.058**	0.000	−0.002	−0.002	−0.002
Duality_i,t-1	(7.500)	(−2.487)	(0.045)	(−2.533)	(0.079)	(−1.418)	(-1.475)	(-0.999)
B_Size_i,t-1	−0.051***	0.036**	0.012	0.028	0.015*	0.002	0.002	−0.002
B_Size_i,t-1	(−14.010)	(2.210)	(1.505)	(0.423)	(1.931)	(0.417)	(0.528)	(−0.447)
B_Female_i,t-1	0.020***	−0.052**	−0.019**	−0.023	−0.021***	−0.002	−0.002	−0.000
B_Female_i,t-1	(21.710)	(−2.255)	(−2.539)	(−0.305)	(−2.921)	(−0.556)	(−0.499)	(−0.033)
B_Ind_i,t-1	−0.148***	0.082***	0.093***	−0.308	0.090***	0.048***	0.049***	0.044**
B_Ind_i,t-1	(−2.830)	(4.754)	(3.525)	(−1.421)	(3.589)	(3.687)	(3.752)	(2.178)
Firm_Size_i,t-1	−0.036***	−0.004	0.042***	0.010	0.041***	0.017***	0.017***	0.019***
Firm_Size_i,t-1	(−13.560)	(−0.392)	(22.993)	(0.907)	(24.170)	(27.416)	(27.313)	(17.530)
Firm_Age_i,t-1	0.095***	−0.024***	0.003	−0.126***	0.004**	−0.007***	−0.007***	−0.012***
Firm_Age_i,t-1	(10.330)	(−3.748)	(1.564)	(−8.424)	(2.122)	(−7.137)	(−7.261)	(−8.807)
ROA_i,t-1	−0.008***	0.202***	0.048***	0.067	0.048***	0.113***	0.113***	0.088***
ROA_i,t-1	(−6.250)	(4.271)	(2.720)	(0.453)	(2.859)	(9.325)	(9.315)	(5.470)
LEV_i,t-1	0.034***	−0.001	−0.046***	0.039	−0.047***	−0.053***	−0.053***	−0.058***
LEV_i,t-1	(10.400)	(-0.053)	(-6.293)	(0.611)	(−6.914)	(−13.896)	(−13.747)	(−9.528)
Slack_i,t-1	−0.032***	−0.028	0.056***	0.067	0.052***	0.049***	0.049***	0.020*
Slack_i,t-1	(−22.520)	(−0.901)	(4.069)	(0.553)	(4.000)	(5.014)	(5.059)	(1.746)
Exchange_i,t-1	−0.036***	−0.001	0.004	−0.255***	0.002	−0.006***	−0.006***	−0.007***
Exchange_i,t-1	(−7.970)	(−0.380)	(1.515)	(−10.024)	(0.749)	(−4.891)	(−4.841)	(−3.121)
Foreign_i,t-1	−0.018***	−0.015	0.010	0.037	0.012*	0.011***	0.011***
Foreign_i,t-1	(−44.890)	(−1.326)	(1.497)	(0.689)	(1.904)	(3.685)	(3.804)
SOE_i,t-1	0.020***	0.033***	−0.005	−0.046	−0.005*	0.010***	0.010***	0.015***
SOE_i,t-1	(21.710)	(3.302)	(−1.628)	(−1.517)	(−1.710)	(6.610)	(6.574)	(5.340)
Top1_i,t-1	−0.148***	0.023*	0.013	−0.022	0.014	0.002	0.002	−0.010
Top1_i,t-1	(−2.830)	(1.903)	(1.397)	(−0.271)	(1.550)	(0.411)	(0.389)	(−1.327)
Media_i,t-1	−0.036***	0.014**	0.012***	−0.000	0.012***	0.002***	0.002***	0.002***
Media_i,t-1	(−13.560)	(2.558)	(15.099)	(−0.067)	(15.351)	(4.957)	(4.936)	(3.170)
Year fixed effects and industry fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
N	26,744	26,744	23,005	26,744	26,744	26,744	26,744	12,408
F-values	10.03	/	/	/	/	/	/	/
Adjusted R²	0.271	0.097	0.297	0.025	0.297	0.146	0.146	0.185

	First stage of 2SLS	Second stage of 2SLS	Alternate ESG measure with LSEG ESG	Alternate ESG measure with CNRDS ESG	Alternate PPI measure	Controlling for Hofstede’s cultural dimensions	Controlling for board cultural diversity	Ruling out the impacts of geographic operational or sales exposure
	Dependent variable: PPI_i,t-1	Dependent variable: ESG_i,t	Dependent variable: ESG_Alt1_i,t	Dependent variable: ESG_Alt2_i,t	Dependent variable: ESG_i,t	Dependent variable: ESG_i,t	Dependent variable: ESG_i,t	Dependent variable:ESG_i,t
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Constant	−3.675***	6.437***	−1.053***	4.306***	−1.025***	3.911***	3.916***	3.969***
Constant	(−242.980)	(5.676)	(−23.373)	(9.237)	(−24.589)	(130.077)	(129.922)	(88.856)
Policy_i,t-1	0.001***
Policy_i,t-1	(3.170)
Predicted_PPI_i,t-1		0.711**
Predicted_PPI_i,t-1		(2.274)
PPIAlt_i,t-1					0.186***
PPIAlt_i,t-1					(4.344)
PPI_i,t-1			0.202***	0.546***		0.014**	0.015**	0.021**
PPI_i,t-1			(4.427)	(5.544)		(2.068)	(2.233)	(2.291)
PDI_i,t-1						−0.002
PDI_i,t-1						(−0.991)
IDV_i,t-1						−0.001
IDV_i,t-1						(−0.785)
MAS_i,t-1						0.011***
MAS_i,t-1						(2.707)
UAI_i,t-1						−0.003**
UAI_i,t-1						(−2.369)
B_Cultural_Diversity							−0.003***
B_Cultural_Diversity							(−3.394)
Duality_i,t-1	0.010***	−0.009**	0.000	−0.058**	0.000	−0.002	−0.002	−0.002
Duality_i,t-1	(7.500)	(−2.487)	(0.045)	(−2.533)	(0.079)	(−1.418)	(-1.475)	(-0.999)
B_Size_i,t-1	−0.051***	0.036**	0.012	0.028	0.015*	0.002	0.002	−0.002
B_Size_i,t-1	(−14.010)	(2.210)	(1.505)	(0.423)	(1.931)	(0.417)	(0.528)	(−0.447)
B_Female_i,t-1	0.020***	−0.052**	−0.019**	−0.023	−0.021***	−0.002	−0.002	−0.000
B_Female_i,t-1	(21.710)	(−2.255)	(−2.539)	(−0.305)	(−2.921)	(−0.556)	(−0.499)	(−0.033)
B_Ind_i,t-1	−0.148***	0.082***	0.093***	−0.308	0.090***	0.048***	0.049***	0.044**
B_Ind_i,t-1	(−2.830)	(4.754)	(3.525)	(−1.421)	(3.589)	(3.687)	(3.752)	(2.178)
Firm_Size_i,t-1	−0.036***	−0.004	0.042***	0.010	0.041***	0.017***	0.017***	0.019***
Firm_Size_i,t-1	(−13.560)	(−0.392)	(22.993)	(0.907)	(24.170)	(27.416)	(27.313)	(17.530)
Firm_Age_i,t-1	0.095***	−0.024***	0.003	−0.126***	0.004**	−0.007***	−0.007***	−0.012***
Firm_Age_i,t-1	(10.330)	(−3.748)	(1.564)	(−8.424)	(2.122)	(−7.137)	(−7.261)	(−8.807)
ROA_i,t-1	−0.008***	0.202***	0.048***	0.067	0.048***	0.113***	0.113***	0.088***
ROA_i,t-1	(−6.250)	(4.271)	(2.720)	(0.453)	(2.859)	(9.325)	(9.315)	(5.470)
LEV_i,t-1	0.034***	−0.001	−0.046***	0.039	−0.047***	−0.053***	−0.053***	−0.058***
LEV_i,t-1	(10.400)	(-0.053)	(-6.293)	(0.611)	(−6.914)	(−13.896)	(−13.747)	(−9.528)
Slack_i,t-1	−0.032***	−0.028	0.056***	0.067	0.052***	0.049***	0.049***	0.020*
Slack_i,t-1	(−22.520)	(−0.901)	(4.069)	(0.553)	(4.000)	(5.014)	(5.059)	(1.746)
Exchange_i,t-1	−0.036***	−0.001	0.004	−0.255***	0.002	−0.006***	−0.006***	−0.007***
Exchange_i,t-1	(−7.970)	(−0.380)	(1.515)	(−10.024)	(0.749)	(−4.891)	(−4.841)	(−3.121)
Foreign_i,t-1	−0.018***	−0.015	0.010	0.037	0.012*	0.011***	0.011***
Foreign_i,t-1	(−44.890)	(−1.326)	(1.497)	(0.689)	(1.904)	(3.685)	(3.804)
SOE_i,t-1	0.020***	0.033***	−0.005	−0.046	−0.005*	0.010***	0.010***	0.015***
SOE_i,t-1	(21.710)	(3.302)	(−1.628)	(−1.517)	(−1.710)	(6.610)	(6.574)	(5.340)
Top1_i,t-1	−0.148***	0.023*	0.013	−0.022	0.014	0.002	0.002	−0.010
Top1_i,t-1	(−2.830)	(1.903)	(1.397)	(−0.271)	(1.550)	(0.411)	(0.389)	(−1.327)
Media_i,t-1	−0.036***	0.014**	0.012***	−0.000	0.012***	0.002***	0.002***	0.002***
Media_i,t-1	(−13.560)	(2.558)	(15.099)	(−0.067)	(15.351)	(4.957)	(4.936)	(3.170)
Year fixed effects and industry fixed effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
N	26,744	26,744	23,005	26,744	26,744	26,744	26,744	12,408
F-values	10.03	/	/	/	/	/	/	/
Adjusted R²	0.271	0.097	0.297	0.025	0.297	0.146	0.146	0.185

Note(s): Variables are defined in Appendix. Robust standard errors are clustered at the firm level. The t-statistics are in parentheses. ^*, ^**, and ^*** indicate significance at the 10, 5, and 1 percent levels (two-tailed), respectively

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