Does ESG performance have an impact on firm value?Evidence from the Chinese textile and garment industry

The effect of ESG performance has recently become a challenge, attracting controversy. This study investigates the relationship between ESG performance and firm value in textile and garment companies; moreover, it examines the role of green innovation in the relationship between ESG performance and firm value. We used 673 annual samples of Chinese Shanghai and Shenzhen A-share textile and garment listed companies from 2012 to 2022. Correlation and panel regression analyses were carried out to evaluate possible links between ESG performance as determined by the ESG rating data published by the Sino-Securities Index Information Service (Shanghai) Co., Ltd and market-based measures of firm value. Our main finding reveals that the ESG performance has a significant positive relationship with textile and garment company value; ESG performance can promote firm value by increasing green innovation, and green innovation has a partial intermediary role between ESG performance and firm value. We conducted multiple sensitivity analyses, and our findings are robust, which can provide useful recommendations for firms, investors, and policymakers.