Can Corporate ESG Ratings Reduce Corporate Idiosyncratic Risk: The Moderating Effect of Multidimensional Information Transparency
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Can Corporate ESG Ratings Reduce Corporate Idiosyncratic Risk: The Moderating Effect of Multidimensional Information Transparency
LIU Weiqi1,2, WANG Guangyao1
1. School of Finance, Shanxi University of Finance and Economics, Taiyuan 030006, China; 2. Institute of Management and Decision, Shanxi University, Taiyuan 030006, China
Abstract Based on data from China’s A-share listed companies from 2009 to 2022, this study examines the impact and mechanism of ESG ratings on corporate idiosyncratic risk, as well as the moderating effect of multidimensional information transparency. The findings reveal that ESG ratings help reduce corporate idiosyncratic risk. Mechanism testing shows that ESG ratings can reduce corporate idiosyncratic risks by alleviating investor irrationality, narrowing analyst prediction differences and improving corporate reputation. The moderating effect test indicates that the effect of ESG rating on reducing the company’s idiosyncratic risk is more significant at lower multi-dimensional information transparency, while higher multi-dimensional information transparency suppresses this effect. The heterogeneity test demonstrates that the effect of ESG ratings in reducing the specific risks of companies is more significant in enterprises with a strong willingness to disclose proactively, labor-intensive enterprises and enterprises in the recession stage. And this effect is more prominent during periods of high economic policy uncertainty and high investor sentiment. The conclusions provide theoretical foundations and practical insights for promoting corporate ESG disclosure, reducing corporate idiosyncratic risk and fostering high-quality enterprise development.
LIU Weiqi,WANG Guangyao. Can Corporate ESG Ratings Reduce Corporate Idiosyncratic Risk: The Moderating Effect of Multidimensional Information Transparency. Economic Survey, 2025, 42(4): 0147.
2025, Vol. 42 
