ESG reputation risk and corporate investment and financing maturity mismatch: evidence from ESG news sentiment

Purpose This study aims to examine the relationship between environment, social and governance (ESG) news sentiment and the maturity mismatch of investment and financing terms among A-share listed companies in China. It explores how media portrayals of corporate ESG performance influence corporate financing and investment behaviors. Design/methodology/approach The research employs a sophisticated analysis using machine learning and natural language processing to evaluate 2,276,364 ESG-related news articles from the Baidu news website. It assesses the sentiment of these reports and correlates these sentiments with corporate data on investment and financing from 2007 to 2021. Findings The findings reveal that positive ESG news sentiment is significantly associated with reduced maturity mismatches in corporate investment and financing. This relationship is particularly strong among state-owned enterprises, mature companies, those in heavily polluting industries and those located in cities with high ESG governance intensity. The study demonstrates that media coverage can influence corporate behavior by enhancing the company’s reputation and easing financing constraints. Originality/value This paper contributes to the literature by providing empirical evidence of the impact of ESG news sentiment on corporate financial practices in an emerging market context. Unlike previous studies that primarily focus on Western contexts or use aggregated third-party ESG ratings, this study directly analyzes news sentiment and its impact on corporate financial decisions, offering a novel insight into the intermediary role of media in financial markets.