ESG Disclosure and Corporate Misconduct: Study of Listed Chinese Companies

Abstract

As corporate misconduct remains a persistent governance challenge, growing attention has been paid to whether ESG practices can effectively restrain such behavior. This study investigates how ESG disclosure affects corporate misconduct and further analyzes the mediating effect of financing constraints as well as the moderating role of audit quality. Using panel data from Chinese A-share listed companies between 2014 and 2023, the results show that ESG disclosure can significantly curb corporate misconduct through the reduction of financing constraints. In addition, the restraining effect of ESG disclosure on corporate misconduct becomes stronger among firms with better audit quality. These findings enhance the understanding of ESG disclosure as a preventive governance mechanism and offer valuable policy implications for strengthening corporate governance and advancing sustainable development in emerging economies.