Test of Synergy Between ESG Performance and Financial Performance

Most scholars focus on the unidirectional positive or negative impact of ESG performance on financial performance, with few studies analyzing the bidirectional causal relationship between corporate ESG performance and its financial performance. The article adopts the PVAR model to consider the ESG performance and financial performance of sample companies as endogenous variables, and conducts systematic generalized moment estimation, impulse response function analysis, and variance decomposition analysis. Research has shown that good ESG performance contributes to improved financial performance, and there is a positive synergistic effect between ESG performance and financial performance.Therefore, companies need to integrate their responsibility practices with their business models, viewing them as strategic tools for sustainable development; The government's mandatory regulation needs to be combined with enterprise self-regulation to form a mixed regulatory model, making it an institutional guarantee for the high-quality development of the capital market.