Can corporate ESG performance mitigate short lending and long investment?

Abstract

ESG performance is the necessary meaning of "double carbon" goal framework, it is the only way for the enterprise to guard against defusing financial risk, green development to improve quality and efficiency, but there is more serious short loan long investment phenomenon in our country. Based on the sample of Chinese A-share listed companies from 2009 to 2021, the relationship between enterprise ESG performance and short loan long investment is empirically tested. The results show that the phenomenon of "short loan and long investment" in companies with good ESG performance is significantly improved, and three of the mechanisms are easing financing constraints, attracting analysts' attention and improving information transparency. This phenomenon is more significant in enterprises with high competition intensity, good internal control, audited by the four major companies and high media attention. The ESG performance of enterprises can alleviate the problem of "short loan and long investment", and also help companies to improve their risk level and market value. This study enriches the literature on ESG driving factors and investment and financing decisions of enterprises, and has important significance for further promoting enterprises' green transformation.