Study on the Impact of Corporate ESG Performance on OFDI Behavior

Against the background of the accelerated internationalization process of enterprises and the extensive penetration of ESG (Environmental, Social and Governance) concepts, this paper empirically examines the impact of ESG performance on enterprises' outward foreign direct investment (OFDI) behaviors and the mechanism of its action based on the panel data of Chinese enterprises in the period of 2009-2021. The results show that corporate ESG performance has a significant positive relationship with OFDI size, with OFDI size (natural logarithm) increasing by about 2.004 units on average for every 1-unit increase in ESG level, and that this positive effect is still robust after controlling for year fixed effects (coefficient 1.299, p< 0.05). Mechanism tests show that ESG performance indirectly promotes OFDI by alleviating financing constraints (KZ index): a 1-unit increase in ESG level is associated with a 1.117-unit decrease in the financing constraints index (p< 0.01), whereas for every 1-unit decrease in financing constraints, OFDI size increases by 0.155 units (p< 0.01), validating a partial mediating effect of financing constraints. In addition, firm size (positive), gearing ratio (negative) and management shareholding (short-term positive and long-term negative) are the key control factors affecting OFDI. The findings provide empirical support for firms to promote their internationalization strategies by enhancing ESG performance and alleviating financing constraints, and also provide a theoretical basis for policy makers to improve ESG guidance mechanisms to promote the high-quality development of corporate OFDI.