How does Environment, Social and Governance Affect the Financial Performance of Enterprises ？

: Under the background of China's economic structural transformation, the green and low-carbon economic development model draws the attention of politicians and academics. The low-carbon strategy provides a supportive political environment for the rapid development of ESG. However, research on the effect of ESG on enterprise financial performance is still insufficient. Using the data of A-share listed companies from 2011 to 2020, this paper examines the impact of ESG on corporate financial performance from the perspectives of ESG rating release and ESG level through Differences-in-Differences (DID) model and panel two-way fixed-effect model. Results show that the release of ESG indicators and the improvement of ESG level can significantly increase the enterprise financial performance. The role of ESG disclosure and level in promoting the enterprise financial performance is more significant in companies with less than 3 years of listing time and no Big Four audits. Furthermore, government intervention can inhibit the boosting effect of ESG on enterprise financial performance, while increased internet and marketization levels can reinforce that effect.


Introduction
Since the beginning of the 21st century, people have attached greater importance to sustainable development, corporate governance, and protection of workers' rights and interests.Simultaneously, increasing environmental pollution and climate change have brought into focus the impact of enterprises on the environment.Against such a background, the United Nations Global Compact proposed the investment concept of Environment, Social and Governance (ESG) for the first time in 2004.This concept advocates to change the traditional investment philosophy taking financial performance as the main evaluation criterion, and to pay attention to environmental, social and governance issues in investment.Since then, a worldwide research boom has occurred in measuring the environmental, social and corporate governance performance of enterprise by using ESG.Currently, China's economy has been shifting to the high-quality development stage.The improvement of people's quality of life, the proposal of the double carbon goal have put forward higher requirements for the enterprise comprehensive development.This fact has driven the further application of ESG indicators in measuring enterprise performance.The concept of ESG encourages enterprises to transform their traditional profit maximization mode.Production and operation decisions should be made with consideration of both the benefits and environmental and social obligations.As such, the impact of ESG on corporate financial performance is uncertain.
In recent years, many scholars have carried out in-depth research on ESG.Among them, most studies focus on the construction of ESG index system [1] [2] and the analysis of factors influencing ESG levels [3][4] [5] .Few studies focus on the impact of ESG on firm performance.Moreover, these studies are only disclosed from ESG [6][7] [8] or an ESG-level perspective [9][10] [11] to explore their impact on corporate financial performance, paying insufficient attention to the heterogeneity of ESG's impact on financial performance.In fact, third-party ESG disclosure and corporate ESG level are two different aspects, so they are likely to have different impacts on corporate financial performance.Moreover, due to the disparities of enterprises themselves, the impact of ESG on corporate financial performance may also be heterogeneous in different types of enterprises.
At the 75th session of the United Nations General Assembly in 2020, China formally put forward the goals of "carbon peak" and "carbon neutrality", which put forward new requirements for China's economic development.As early as 2006, Shenzhen Stock Exchange issued the Guidelines on Social Responsibility of Listed Companies.This guideline puts forward requirements on the performance of listed companies in ESG in addition to pursuing economic benefits, and encouraged companies to voluntarily disclose social responsibility reports.On September 30, 2018, China Securities Regulatory Commission revised the Code of Governance for Listed Companies and established the basic framework of ESG information disclosure for the first time, clearly stipulating that listed companies should disclose environmental information (E), social responsibility (S) and corporate governance (G) information in accordance with laws and SHS Web of Conferences 163, 04015 (2023)  https://doi.org/10.1051/shsconf/202316304015ICSSED 2023 regulations and requirements of relevant departments.As the first third-party service agency in China to conduct rating based on global ESG standards, Shangdao Ronglv established and released the ESG rating index in 2015, which is often used by investors as the basis for their investment decisions.Since the ESG index published by Shangdao Ronglv mainly serves financial institutions and investors and not affected by external factors, the ESG rating published in 2015 can be regarded as exogenous impact and analyzed by using the method of quasi-natural experiment.
In order to make up for the shortcomings of existing literature, this paper uses the data of A-share listed companies from 2011 to 2020 and adopts the DID model to analyze the impact of the third-party's announcement of ESG rating on corporate financial performance in 2015.At the same time, the panel two-way fixed effect model is also used to explore the impact of ESG score on enterprises' financial performance.On this basis, the heterogeneity of these two types of influences in different listing years and whether they are audited by the four major audit reports is tested.The main contributions of this paper is as follows.Firstly, the influence of ESG on corporate financial performance is analyzed from the perspective of ESG disclosure and ESG level.Secondly, focus on the heterogeneity of the impact of ESG on corporate financial performance, which makes the research conclusions more targeted.
The organizational structure of the remaining part of this paper is as follows: The second part summarizes the relevant researches on ESG and enterprise performance; After introducing the research data and methods of this paper, the fourth part makes a descriptive analysis of ESG disclosure, ESG level and financial performance of enterprises.The fifth part is the empirical results, and the last part is the conclusion and discussion.

Literature review
ESG-related research can be divided into three stages.In the early stage, under the ESG initiative of the United Nations, a large number of studies (Escrig-Olmedo et al., 2019; Dorfleitner et al., 2015) focused on the construction and evaluation of ESG indicator system so as to better measure and evaluate the performance of enterprises in the aspects of environment, social responsibility and corporate governance.Subsequently, in order to better understand the driving factors behind enterprise ESG level and find a reasonable way to improve enterprise ESG level, many scholars analyzed the influencing factors of enterprise ESG level theoretically and empirically.Existing research mainly focused on the market, leadership and owner characteristics [12] , financial status [13] , industry type [5] and gender factors [3][4] of companies， analyzing the impact of these factors on the level of enterprise ESG.As research progresses, the relevant research of enterprise ESG goes into the stage of performance analysis.Relevant studies include the impact of corporate ESGs on financial performance [14][15] , investment decisions [16] , and sustainable development [17] .Since this paper mainly focuses on the impact of ESG on financial performance, this part mainly analyzes the impact of ESG on financial performance from two aspects: ESG level and ESG disclosure.
In terms of the ESG level, Michał (2022) [18] used data on the eight companies that dominate the Polish energy sector and finds that the corporate ESG score is highly correlated to the financial performance of the company.Based on the data of large listed power generation companies, Zhao et al. (2018) [19] found that the ESG performance of large listed power generation companies has a positive impact on financial performance.Cheng et al. (2014) [20] indicated that enterprises with better performance in social and environmental aspects can effectively alleviate financing constraints and thus have better financing channels.Zhou et al. (2022) [21] pointed out that the improvement of ESG performance of listed companies can increase the company's financial performance and ultimately bring about an increase in the company's market value.Some scholars have also found that the impact of ESG level on corporate financial performance is heterogeneous.Using 17 years of panel data from companies in 48 countries, Shin et al. (2022) [22] found a stronger relationship between a firm's ESG level and financial performance in a country with a highly individualistic or macho culture, but firm's ESG level is less correlated with financial performance in a country with a high power distance or a culture of avoiding uncertainty.Broadstock et al. (2021) [23] took the occurrence of COVID-19 as an exogenous shock and finds that the portfolio with high ESG is usually better than the portfolio with low ESG, and better ESG performance can reduce financial risks.
From the perspective of ESG disclosure, Liu and Lin (2022) [24] analyzed the data of Chinese A-share pharmaceutical enterprises from 2017 to 2020, indicating that good ESG information disclosure can effectively reduce the financial risk of enterprises.However, other studies came to the opposite conclusion (Fatemi et al.,  2017)  [25] .Chen and Xie (2022) [26] took non-financial listed companies from 2000 to 2020 as samples and finds through research that ESG disclosure has a favorable impact on corporate financial performance, and investors with ESG preference have a moderating effect on the relationship between ESG disclosure and financial performance.In addition, Raimo et al. (2021) [27] concluded that ESG disclosure significantly reduces the debt financing cost of enterprises, and companies with higher transparency in ESG information dissemination are more likely to obtain third-party financial resources.Schiemann and Tietmeyer (2022) [28] conducted a study based on the uncertainty of the company's future prospects and found that the disclosure of ESG helps to reduce such uncertainty, and also reduces the intensity of the relationship between ESG disputes and analyst forecast errors.

DID model
This paper uses the DID method to explore the impact of ESG disclosure on corporate financial performance, and the specific model is as follows: (1) Among them, the explanatory variable  �� is the financial performance of i enterprise in t period. � represents the regional dummy variable.If the ESG level of the enterprise is disclosed in 2015, the  � is equal to 1, meaning it is the experimental group.Otherwise,  � is equal to 0, meaning it is the control group. � is the time dummy variable.The sample value before disclosure is 0, while the sample value after disclosure is 1.  � �  � is the interaction term. �� reflects the control variables that change at the enterprise level over time and may affect the financial performance of the enterprise. � and  � represent firm fixed effects and year fixed effects, respectively. �� reflects random perturbation terms.

Two-way fixed-effect model
When examining the impact of ESG level on corporate financial performance, this paper adopts the panel twoway fixed-effect model: (2) Among them, the explanatory variable  �� represents the financial performance level of Company i in the t period.The  �� represents the ESG level index of Company i in the T period.The control variables here are the same as those in the DID model.

Moderating effect model
On the basis of drawing on the econometric model (2), this article sets the moderating effect model as follows: In Formula (4), the interaction term between enterprise ESG level and Internet development level is added to the model.Among them, the Internet development level index is obtained by weighting multiple dimension indicators using entropy weight method, representing the Internet development level of Province i in period t.In Equation ( 5), the interaction term of enterprise ESG level and government intervention is added to the model.Government intervention is expressed by the proportion of fiscal expenditure in GDP of province i in period t.In Equation ( 6), the interaction term of the enterprise ESG level and the marketization level is added to the model.Referring to Fan Gang's marketization index,  �� represents the marketization development level of i province in t period.

Variable setting
1) Explained variable: corporate financial performance (Roa).According to Wen and Fang (2008) [29] , the net profit rate of total assets is used to measure the financial performance of an enterprise.
2) Core explanatory variable: in the differential model, the interaction term Treat i ×Time t is the core explanatory variable of this paper, representing whether the lowcarbon pilot policy has been implemented in the city i where the enterprise is located in year t.If it has been implemented, the value of this interaction term is 1; if not, it is 0. In the two-way fixed-effect model, ESG is the core explanatory variable of this paper.The ESG score published by Bloomberg is taken as the measurement index.
3) Control variables: In order to control the influence of other factors on corporate financial performance as much as possible, this paper also introduces a series of control variables.First, the size of the company (Size), measured by the total annual assets.The second is the net profit rate of total assets (Roe), which is reflected by the operating net profit and the average balance of shareholders' equity.The third is management shareholding ratio (Mshare), which is measured by dividing the number of management shares by the total share capital.Fourth, it is the cash flow ration (Cashflow), which is measured by dividing the net cash flow generated by operating activities by total assets.The fifth is the growth rate of operating revenue (Growth), which is calculated by (current year's operating revenue \ last year's operating revenue) -1.
4) Other variables: Firstly, Listage represents the number of years a company has been listed.Secondly, Big4 is a dummy variable.If an enterprise has been audited by the Big Four, the value of Big4 is 1.Otherwise, the value of Big4 is 0. Thirdly, in order to further study the impact of ESG level on corporate financial performance, this paper also introduces moderating variables, including the level of Internet development (Inter), government intervention (Fis) and marketization (Mar).The measurement of Internet development level is based on Han et al. (2019) 's comprehensive development level measurement system of Internet in China.The comprehensive index of Internet development level in each province is obtained by using entropy weight method.Government intervention and marketization levels are represented by the proportion of fiscal expenditure in GDP and Fan Gang marketization index respectively.

Data description
This paper selects China's A-share listed companies from 2011 to 2020 as samples.The enterprise-level data mainly come from the CSMAR database.ESG rating data is obtained from Wind database.In order to avoid the influence of abnormal samples, this paper partially draws on the practice of existing studies (Xie and Lyu, 2022) [30] , and treats the original data as follows: (1) Eliminate listed enterprises with "ST" and "* ST" in the stock abbreviation, listed enterprises that have been delisted or stopped listing; (2) Eliminate companies with seriously missing variable data; (3) Partial missing data is supplemented by linear interpolation method.After processing, the nonequilibrium panel data of 28523 observed values of 4066 listed companies are obtained in the part of the differential model.Due to some missing data in Bloomberg ESG score, the unbalanced panel data of 1136 listed companies with a total of 9957 observations were obtained in the two-way fixed effect model part.Table 1 and 2 show the descriptive statistics of each variable in the differentially differential model and the two-way fixed effect model respectively.In the two-way fixed effect model, the logarithm of each variable is taken.

Spatio-temporal pattern and evolution
From Fig. 1.1 to Fig. 1.4, we can see the spatial and temporal evolution pattern of enterprise ESG level.In 2011, enterprises with high ESG level are mainly concentrated in the eastern coastal areas, mainly in Beijing, Shanghai and other places.The ESG level of some enterprises is negative, mainly located in Gansu, Jiangxi, Zhejiang and Guangdong.In 2020, the level of enterprise ESG has been improved nationwide, especially in Beijing, Shanghai, Guangdong, Jiangsu and Zhejiang provinces.In the same period, there is no region with negative ESG level.
From the perspective of corporate financial performance, enterprises with high financial performance in 2011 are concentrated in the eastern coastal areas.Among them, the financial performance of enterprises in Beijing, Shanghai and Guangzhou is more prominent, and the difference between them and the surrounding areas is obvious.However, in 2020, the financial performance of enterprises nationwide decreased, and the difference between the financial performance of enterprises in Beijing, Shanghai, Guangzhou and the surrounding areas also decrease.This change is likely due to the fact that the COVID-19 pandemic in 2019 reduced the economic performance of enterprises in most parts of China, and therefore the overall performance of enterprises decreased compared to 2011.   2 shows the results of the parallel trend test.Before 2015 (impact year), the change trend of the treatment group and the control group is generally consistent.That is, there is no significant difference in the change trend between the two groups of samples.However, in 2015, there is a significant difference between the two groups of samples.After the disclosure of enterprise ESG information, the change trend of the two groups of samples is significantly different.The result shows the rationality of using DID model in this paper.

The impact of ESG disclosure on corporate financial performance
This paper takes the ESG rating index released for the first time in 2015 as an exogenous impact, and empirically tests the impact of ESG disclosure on corporate financial performance by using the DID model.Model1 in Table 3 is the results with company size and net profit margin on total assets added.Model2 is the result of adding cash flow ratio as control variable on the basis of Model1.Model3 adds revenue growth rate and management shareholding ratio as control variables on the basis of Model2.In these cases, the coefficients of the core explanatory variable  � � �� � are all positive, and the P value is less than 0.05, indicating that it is significant at the significance level of 5%, which means that the disclosure of the ESG has a significant promoting effect on the financial performance of the enterprise.
ESG level measures the performance of enterprises in environmental, social and corporate governance and other aspects.It is a comprehensive indicator that can reflect the operation and quality of enterprises, which is conducive to investors and financial institutions to have a more comprehensive understanding of enterprises.The disclosure of the ESG level of the enterprise by the third party provides important information for investors and financial institutions to evaluate the development status and future prospects of the enterprise.Based on this information, investors and financial institutions are able to invest more money in the intended business.Therefore, ESG disclosure can bring more financing opportunities to enterprises, reduce their financing constraints, and enable enterprises to obtain funds at a lower cost (Giese et al.,2019).At the same time, the disclosure of ESG level by third parties also forces enterprises to increase the number of green innovation [31] , making enterprises shift from the original goal of simply pursuing profit maximization to the multiple goals of focusing on both profit and environmental and social performance.Enterprises promote the green transformation of enterprises through the innovation of green technology, which improves the level of financial performance.

Robustness test (1) Change the sample size
In order to further ensure the robustness of the basic regression results, winsor tail reduction treatment is carried out on the samples here, and special samples that may affect the conclusion are removed.Model1 and Model2 in Table 4 respectively show the regression results after 1% and 5% tail reduction treatment of core variables in the differential model.It can be seen that the coefficient of the interaction term is still significantly positive after the sample is reduced.Therefore, ESG disclosure promotes the improvement of enterprise financial performance, which is consistent with the conclusion obtained by the benchmark regression, indicating the robustness of the conclusion.(2) Placebo test In order to avoid the impact of missing variables and random factors on the test results, this paper randomly selects the companies that release ESG indicators and generates the release time of ESG indicators, conducting the time placebo test and individual placebo test.In this paper, all control variables are added for regression.In order to further enhance the effectiveness of placebo test, the above process is repeated 500 times.Finally, the distribution diagram of the estimated coefficients of the cross item  � � �� � is drawn in Fig. 3.It can be seen that the estimated coefficients of the false DID term are concentrated around 0, indicating that there is no serious problem of missing variables in the model setting.We find the core conclusion is still robust.(3) Counterfact test In this paper, a counterfact test is adopted to postpone the release year of ESG rating for 3 years, and the regression is carried out again.If the regression coefficient is still significant, it indicates that the changes in corporate financial performance may be caused by other policies or random factors.Otherwise, it can be proved that the financial performance of enterprises is indeed affected by the ESG disclosure.
After testing, the regression results in Table 5 show that the coefficient of the interaction term is not significant, which means that the change of corporate financial performance is indeed influenced by the ESG disclosure, and the conclusion passes the robustness test.(4) Propensity score matching method The endogenous problems caused by reverse causality and sample selection bias are discussed below.First of all, the release of ESG rating by the third-party institution can be regarded as an exogenous impact, which is not susceptible to the influence of corporate financial performance.Therefore, the endogenous problems caused by reverse causality can be alleviated.Secondly, in order to reduce the intrinsic bias caused by sample selection bias, this paper adopts propensity score matching method for robustness test and nearest matching method for sample matching.The kernel density map of propensity scores of the treatment group and the control group before and after matching is shown in Fig. 4. Propensity scores of the samples of the treatment group and the control group overlap before matching, satisfying the common value hypothesis.While, propensity score distributions of the samples of the treatment group and the control group basically coincide after matching, indicating good matching results.In this paper, matched samples are used for differential analysis, and the results are shown in Table 6.Model1 only controls the two-way fixed effect of enterprise and year, without adding control variables.Model2 adds all control variables on the basis of Model1.It can be seen that the coefficients of the two columns of crossmultiplication terms are still positive and significant, which confirms the robustness of the conclusions of the basic regression.It means that the ESG disclosure does have a positive impact on the financial performance of the enterprise.

Benchmark regression
This paper uses the panel two-way fixed effect model to measure the influence of ESG level on the financial performance of enterprises.Table 7 reports the regression results of gradually adding control variables to the model.Model1 reports the results of adding company size and net profit rate of total assets as control variables.Model2 adds cash flow ratio and operating growth as control variables on the basis of Model1.On the basis of Model2, Model3 also takes the shareholding ratio of management as the control variable.From Model1 to Model4, coefficients of ESG level of core explanatory variable are all positive and significant, indicating that a high ESG level has a positive promoting effect on the financial performance of enterprises.The conclusions obtained here are similar to the research results of many scholars. [10][32]he improvement of ESG level can help improve intangible assets of a company, including corporate culture, human capital, corporate reputation, etc. [33] .Thus, it can attract more investment and improve its financial performance.At the same time, ESG can increase cash flow by promoting revenue growth, reducing costs, minimizing regulatory and legal interventions, and increasing employee productivity, optimizing investment and capital expenditure [34] , thus leading to better financial performance.Chang et al. ( 2021) [35] also points out that higher ESG performance can significantly improve the financing efficiency of enterprises.In addition, higher ESG level can bring more green innovation achievements to enterprises, thus promoting the financial performance of enterprises [36] .

Robustness test (1) Change the sample size
In this part, the samples are also processed by winsor tail reduction.In Table 8, Modell and Model2 respectively show the regression results after 1% and 5% tail reduction for core variables in the two-way fixed effect model.We found that the core conclusion of this part remained unchanged after tail reduction treatment of samples: ESG level has a significant positive impact on corporate financial performance.(2) lag estimation In this paper, the practice of Li et al. (2022) [37] was used to estimate the two-way fixed effect model of the panel using the model of lagged variables.First of all, we delayed all variables by one period, and the results are shown in Table 9.After lagging all variables by one period, the coefficient of enterprise ESG level is still significantly positive, indicating that the influence of ESG level on enterprise financial performance is significant and sustainable.

According to the listing years
In order to test the heterogeneity of ESG disclosure on corporate financial performance, this paper first divides the whole sample into two sub-samples with a listing life of less than three years and a listing life of more than or equal to three years according to the listing years of enterprises, and conducts tests respectively.The results are shown in Table 10.Results in Model1 and Model2 show the regression results of DID, and those in Model3 and Model4 show the regression results of two-way fixed effect model.
For enterprises whose listing time is less than 3 years, the disclosure of ESG and the level of ESG play a significant role in promoting the financial performance of enterprises.For enterprises whose listing time is greater than or equal to 3 years, ESG disclosure and ESG level have no significant impact on their financial performance.This is because enterprises listed less than 3 years ago are still in the preliminary stage of development, so investors and financing institutions can hardly measure the development potential of enterprises through their previous financial performance.Ilze and Nataļja (2021) [38] points out that with the increase of responsible investment, the demand for non-financial data has multiplied, the use of ESG analysis by investors in investment decisions has grown rapidly, and the release of ESG ratings for these newly listed companies has allowed investors and financial institutions to evaluate the development potential of these companies.At the same time, ESG index level also provides investors and financial institutions with market signals other than financial performance, so that they are willing to invest funds in these enterprises.This will alleviate the financing constraints of initial listed companies, reducing financing costs and improving their financial performance.In contrast, enterprises listed for more than three years have already had sufficient foundation for development, and investors and financial institutions can judge their future development ability through their previous financial annual reports.Therefore, ESG disclosure and ESG level do not have a significant impact on the financial performance of these enterprises.

According to whether the enterprise has passed the Big Four audit or not
In order to further analyze the possible heterogeneity, this paper also divides the samples into two parts: audited by four major companies and not audited by four major companies.After testing, the results are shown in Table 11, where Model1 and Model2 show the regression results of DID, and Model3 and Model4 show the regression results of the two-way fixed effect model.
From the table, we can see that for enterprises audited by the Big Four, neither the disclosure of ESG nor the level of ESG indicators has a significant impact on their financial performance, while for enterprises not audited by the Big Four, the disclosure of ESG and the level of ESG play a significant role in promoting their financial performance.Phan et al. (2020) [39] found that customers of the Big Four accounting firms have better financial performance.The financial reports audited by the Big Four accounting firms can ensure the authenticity and reliability of the audited companies' financial statements.It often has higher quality and stronger credibility (Zahid et al.,2022) [40] .Ado et al. (2020) [41] also points out that in order to maintain their own reputation, it is difficult for the four major companies to violate the established audit norms, so they can be widely accepted by investors and financial institutions, so as to judge whether the four major companies have development prospects and investment value according to their audit reports.Therefore, the issue of ESG rating and the level of ESG have little impact.For those enterprises that have not been audited by the Big Four, their financial reports may have quality problems and have low credibility in the eyes of investors and financial institutions.Therefore, ESG disclosure and ESG index level of enterprises can provide certain decisionmaking basis for investors and financial institutions and alleviate information asymmetry in the financing process.More investors are willing to invest in enterprises that have not been audited by the four major companies, which alleviates the financing constraints of enterprises to a certain extent and significantly improves the financial performance of enterprises.

Analysis of adjustment effect
To test the role of the Internet level, the government and the market in the process of the influence of ESG level on corporate financial performance, this paper uses the moderating effect model to test.Table 12 reports the test results of the moderating effect model.
It can be seen from the table that the crossmultiplication coefficient (inesg) between the development level of the Internet and ESG is positive and significant, which means that the development of the Internet plays a positive role in promoting the impact of ESG level on the financial performance of enterprises.This is because the higher development level of the Internet is conducive to the expansion and dissemination of information.Investors and financial institutions can quickly and timely obtain the information of enterprise ESG level through more channels, so as to make better investment decisions.This makes it easier for enterprises with higher ESG level to obtain funds, resulting in the improvement of financial performance.Therefore, under the higher development level of the Internet, the promotion role of enterprise ESG score on financial performance can be better played.Similarly, the cross coefficient (maresg) between marketization level and ESG is also significantly positive, indicating that marketization also plays a positive role in promoting the impact of ESG level on the financial performance of enterprises.As the market plays a leading role in resource allocation, a higher marketization level can make resource factors flow more freely.The fund can be smoothly transferred from the hands of investors and financial institutions to enterprises with development potential, thus improving the financial performance of enterprises.However, the cross-product term (fisesg) between government intervention level and ESG is negative and insignificant, which means that the promoting effect of ESG level on the financial performance of enterprises disappears under the influence of government intervention.This is because excessive government intervention will bring certain rent-seeking behaviors.Meanwhile, government policies and preferences are more likely to favor state-owned enterprises.As a result, resources are mis-allocated and inefficient, which makes it difficult for some companies with development potential to obtain sufficient funds through the financing market, thus inhibiting the promotion effect of ESG level on corporate financial performance.

Conclusions and policy
Based on the data of A-share listed companies from 2011 to 2020, this paper explores the impact of corporate ESG disclosure and ESG level on their financial performance through the DID model and the two-way fixed effect model respectively.It is found that both ESG disclosure and ESG level have a significant positive effect on the improvement of corporate financial performance A series of robustness tests demonstrate the reliability of the results.This paper also carries out heterogeneity analysis on the two models respectively.We find that the positive impact of ESG on corporate financial performance is more reflected in the companies listed less than three years and without the audit of the four major companies.The disclosure and level of ESG make it easier for investors to discover the development potential of these companies, thus easing the financing constraints of the companies and improving the financial performance.Finally, this paper also uses the moderating effect model and finds that the improvement plays a promoting role in the influence of ESG on corporate financial performance.This is because the Internet level accelerates the dissemination of ESG information, and the marketization level promotes the free flow of resource elements, thus strengthening the promoting role of ESG on corporate financial performance.Government intervention, due to rent-seeking, leads to resource mis-allocation and thus plays an inhibitory role.
According to the above analysis and conclusion, this paper puts forward several policy suggestions for reference.From the perspective of enterprises, it is necessary to change the traditional mode of simply pursuing profit maximization, strengthen the emphasis on ESG, and comprehensively improve the performance of enterprises in all aspects.From the perspective of the government, firstly, the ESG information disclosure system should be perfected, while ensuring the authenticity and objectivity of third-party ESG rating agencies' disclosure of relevant information of enterprises, so as to form a good ESG investment ecology.Secondly, enterprises should be encouraged to pay more attention to the environment (E), social responsibility (S) and corporate governance (G), and set up a reward and punishment mechanism according to the ESG level of enterprises to improve the ESG level of enterprises, which will promote the corporate financial performance.Thirdly, the government is suggested to promote China's Internet infrastructure construction and marketization level, expand the channels of information transmission, give full play to the decisive role of the market in resource allocation, and further deepen the positive impact of ESG score on enterprise financial performance through the improvement of the Internet and marketization level.Finally, the government needs to create a good business environment.Reduce excessive intervention in the market, build a service-oriented government, and better play the role of ESG level in promoting corporate financial performance through the market.From the perspective of investors, enterprises with higher ESG level tend to have better financial performance, so investors can make full use of ESG information to evaluate the potential of enterprises, thus make better investment decisions.

Fig. 2
Fig.2 Parallel trend test Fig.2shows the results of the parallel trend test.Before 2015 (impact year), the change trend of the treatment group and the control group is generally consistent.That is, there is no significant difference in the change trend between the two groups of samples.However, in 2015, there is a significant difference between the two groups of samples.After the disclosure of enterprise ESG information, the change trend of the two groups of samples is significantly different.The result shows the rationality of using DID model in this paper.

Table 4
Change the sample size

Table 6
Propensity Score Matching

Table 7
Two-way Fixed Effects Model

Table 8
Change the sample size