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This study investigates the influence of social trust on the attainment of corporate environmental, social and governance (ESG) objectives.
Abstract
Purpose
This study investigates the influence of social trust on the attainment of corporate environmental, social and governance (ESG) objectives.
Design/methodology/approach
This study conducts panel regression analysis on a distinctive dataset for 2009–2017 on Chinese firms.
Findings
The analysis reveals a significant positive association between social trust and firm-level ESG practices. Moreover, the impact of social trust on shaping ESG outcomes is further amplified by factors such as economic growth, corporate governance standards and institutional quality. This relationship remains statistically positive when the authors employ alternative measures and methodologies, such as the instrumental variables, propensity score matching and difference-in-differences approaches. Notably, the results of heterogeneity tests indicate that the Trust–ESG nexus is more prominent for state-owned enterprises and firms with substantial market capitalization, superior profitability and higher leverage.
Originality/value
This study expands the comprehension of the determinants of ESG and underscores the influential role of social trust as an informal institution in enhancing a firm's ESG performance.
Details