How to Corporate Financialization Impact on Financial Performance, The Moderating/Mediating Role of ESG (Environmental, Social, and Governance) Practices

Abstract

Measuring corporate financialization concerning environmental, social, and governance standards has not been thoroughly researched, considering the growing attention on this subject among businesses that are not financial. More research is required to truly comprehend the impact of ESG practices on the correlation between financialization and economic performance. Previous research efforts have not correctly accounted for significant variances in this field. This study attempts to address this limitation by investigating the effect of corporate financialization on the financial performance of both State-Owned Enterprises and Non-State- Owned Enterprises in China. The work employed dataset collected about performance indicators of different enterprises from different sources and had identified that the corporate financialization had enhanced financial performance in NSOEs (coefficient=0,3501, p<0,0001) compared to SOEs (coefficient=0,2801, p<0,0001). Further, the study also shows that the environmental component of ESG has a positive and significant impact on financial performance in both SOEs (coefficient=0,1197, p=0,0028) and NSOEs (coefficient=0,1492, p<0,0001).