The Influence Of Firm Size On The ESG Score Based On Corporate Sustainability Ratings

The core of sustainable finance is that investors should carry out economic activities based on their moral standards.When investors judge the sustainability of firms and whether firms meet the ethical standards of investors,they mainly rely on the ESG score provided by rating agencies.Most of the current research literature mainly explores the relationship between corporate sustainability performance(CSP)and corporate financial performance(CFP).The in-depth study of ESG score is an easily ignored topic in the literature.Whether investors’ investment activities based on ESG score meet their ethical standards,and whether ESG score can really measure the sustainability of a company.Using the ESG scoring system of Hua Zheng,this thesis analyzes the impact of firm size(SIZE),the data availability(DA)and the resources for providing ESG data(RPD)on the corporate sustainability performance,in which the firm size variable is measured by the number of employees,total assets,market capitalization and revenue;The data availability is measured by 11 disclosure indicators;The resources for providing ESG data use three dummy variables:the number of other committees,whether to issue independent social responsibility reports and whether the sustainability reports refer to GRI guidelines.In addition to using the ESG score,the corporate sustainability performance also makes a comparative inquiry of environmental score,carbon neutralization score and greenhouse gas(GHG)emission intensity.This thesis uses the linear mixed-effect model(LMM)to explore the impact of firm size variables and other variables on the corporate sustainability performance.This thesis also uses the general structural equation model(SEM)to test the results of the linear mixed-effect model,and explores the direct impact,indirect impact and total impact of each variable on ESG score,as well as the impact ways.The results show that firm size(SIZE),the data availability(DA)and the resources for providing ESG data(RPD)have a significant positive correlation with the corporate sustainability performance,which can be explained by organizational legitimacy.This means that large firms have more ESG data disclosure resources.More resources will lead to more available data in ESG database,whether positive or negative,will improve the evaluation of the overall sustainability of the company in the database.In order to avoid the contingency of a single database,this thesis changes the database and uses the ESG score of Wind database and the ESG score of Bloomberg database to test the robustness and obtains similar results.The results raise the question of whether the ESG score measures the corporate sustainability performance in a way that benefits large firms with more resources without providing investors with the information they need to make decisions according to their ethical standards.Based on the research results,investors and scholars should reopen the discussion on the accuracy of using ESG scores to measure sustainability performance.