Research on the Impact of Corporate ESG Performance on ROA

Abstract

Against the backdrop of China’s transition towards high-quality economic development, the impact mechanism of corporate ESG performance on its market value has become a key proposition in deciphering the path of sustainable development. This article is based on data from A-share listed companies from 2015 to 2021, integrating stakeholder theory, resource-based theory, and signal transmission theory to construct a three-dimensional theoretical framework that includes a superlinear production function for green technology innovation, an exponential decay model for supply chain default probability, and a fractional function for governance signal efficiency. The mixed OLS model is used to empirically test the impact of ESG performance on corporate return on assets (ROA). Research has found that for every one level increase in a company’s ESG score, ROA can significantly increase by 1.617%, and the positive effect of non-state-owned enterprises is significantly higher than that of state-owned enterprise; Mechanism analysis shows that environmental responsibility improves production efficiency through the marginal revenue increase of green patents and the threshold triggering mechanism of policy subsidies. Social responsibility optimizes asset turnover by reducing the probability of supply chain default. Governance level relies on the degree of marketization to regulate signal transmission efficiency and reduce financing costs. Based on the conclusion, this article proposes a “four-dimensional synergy” policy framework: enterprises need to establish green patent portfolios and dynamic equity incentive mechanisms, the government should implement a tiered environmental subsidy and differentiated disclosure system, investors can develop ESG derivatives and improve risk management models, and the public can promote corporate transparency practices through a technology empowered supervision network, providing theoretical and empirical support for solving the “greenwashing” dilemma and addressing international ESG trade barriers.