ESG disclosure, public perception and corporate financial performance: An empirical study based on textual analysis

Abstract

With the proposal of dual carbon goal, environmental, social and governance (ESG) disclosure has become an important indicator for measuring corporate financial performance(CFP). This study investigates the impact of corporate ESG disclosure and public perception of ESG on CFP within the context of China's A-share market. Utilizing ESG disclosure data from the annual reports of firms listed on the Shanghai and Shenzhen stock exchanges from 2014 to 2023, the study employs the Elaboration Likelihood Model (ELM) to analyze the central route between ESG disclosure and CFP, as well as the peripheral route between public perception of ESG and CFP. Additionally, the moderating effect of social media text features on the central route is examined. The findings reveal a significant inverted U-shaped nonlinear relationship between the degree of ESG disclosure and CFP. Similarly, public perception of ESG also exhibits an inverted U-shaped relationship with CFP. Importantly, negative emotions within social media texts significantly moderate the relationship between ESG disclosure and CFP. Furthermore, the inverted U-shaped effect between ESG disclosure and CFP is more pronounced in firms with lower R&D investment ratios. This study contributes to the literature by exploring the complex interplay between ESG disclosure, public perception, and CFP within the context of social media, offering valuable insights for ESG practices in the electronics equipment manufacturing industry.