Emerging Market Globalization and Corporate ESG Engagement

This paper examines how globalization process shapes the corporate ESG efforts in emerging markets. Using a staggered difference-in-difference model based on the gradual inclusion of China's A-shares in the MSCI index, we find that public companies significantly improved their ESG performance and disclosure quality after being included. And the foreign financial intermediary, MSCI Inc., plays a significant first-order role. The results are robust to propensity score matched sample. Notably, the impact on ESG disclosure was significantly greater than on ESG performance, and the effect is more pronounced for non-SOEs and firms with weak governance. The inclusion also leads to significant increases in foreign holdings, the proportion of women directors, and analyst attention, which have promoting effects on corporate ESG performance and disclosure ratings. This study sheds light on the macro-level determinants of corporate ESG engagement