Qian, BinshengPoshakwale, SunilTan, Yusen2024-11-272024-11-272024-11Qian B, Poshakwale S, Tan Y. (2024) ‘E’ of ESG and firm performance: evidence from China. International Review of Financial Analysis, Volume 96, Part B, November 2024, Article number 1037511057-5219https://doi.org/10.1016/j.irfa.2024.103751https://dspace.lib.cranfield.ac.uk/handle/1826/23226Following the ESG rating divergence reported in the previous research studies, we develop a novel firm-level Green Commitment (GC) index by incorporating new dimensions of environmental management and governance. We construct GC scores for all A-share listed companies in China from 2015 to 2021 and analyze whether firms with greater environmental commitment exhibit improvements in their future performance. Our results show that firms with high GC scores achieve higher stock returns without incurring extra risk. Additionally, a strong environmental commitment can enhance operating performance by mitigating financial constraints. The evidence supports the view that environmental investing contributes to the creation of positive shareholder value. Our GC index can be applied more widely to resolve the mixed evidence on the value implications of corporate environmental commitments.enAttribution 4.0 Internationalhttp://creativecommons.org/licenses/by/4.0/3502 Banking, Finance and Investment35 Commerce, Management, Tourism and Services3507 Strategy, Management and Organisational BehaviourFinance3501 Accounting, auditing and accountability3502 Banking, finance and investment3801 Applied economicsEnvironmental investingESG divergenceFirm performanceFinancial constraintsIndustry competitionState ownershipArticle55606010375196