Environmental and Social Performance and the Firm Performance of Chinese Listed Companies - A Study of the Moderating Role of Government Ownership and CEO Duality

Abstract: This study investigates the relationship between environmental and social (ES) performance and firm performance, while also exploring the potential moderating effects of government ownership and CEO duality. Adopting a quantitative approach, fixed effects panel regressions are employed to analyze the relationships based on previous empirical literature and theoretical perspectives, including agency theory, stakeholder theory, government ownership, and CEO duality. The initial findings reveal a positive association between ES performance and firm financial performance, although these relationships are not statistically significant. However, with the inclusion of interaction terms, the results demonstrate significant changes. ES performance exhibits a positive and statistically significant correlation with Tobin's Q, indicating superior ES performance by the firm. However, the interaction between ES performance and state-owned enterprises (SOEs) shows a negative and significant correlation with Tobin's Q. Furthermore, the study reveals a positive and significant correlation between ES performance and CEO duality, as well as a significant negative correlation between the interaction of CEO duality and ES performance. While our research employs fixed effects models to mitigate endogeneity issues, it does not account for simultaneity, which may introduce potential bias. Nonetheless, this study contributes to the existing knowledge by extending the understanding of the relationship between ES performance and firm performance, addressing the moderating role of government ownership and CEO duality.