Does ESG performance influence corporate share repurchases? Evidence from China

This study examines whether environmental, social, and governance (ESG) performance influences corporate share repurchase decisions, using a panel of A-share listed firms in China from 2018 to 2022. The findings show that firms with stronger ESG performance are significantly more likely to conduct share repurchases—particularly genuine (fully executed) buybacks. This relationship is more pronounced among non-state-owned enterprises, during periods of market downturns, in highly competitive industries, and among smaller firms. Mechanism analysis reveals that ESG facilitates repurchase activity by alleviating financing constraints and strengthening equity-based incentives. Furthermore, ESG-aligned repurchases are associated with enhanced R&D investment, improved financial performance, and superior stock market returns. These results highlight the strategic role of ESG in shaping responsible financial policy and provide insights for regulators and policymakers seeking to embed sustainability principles into corporate financial decision-making.