Does the ESG Performance of Cvc Parent Companies Have a Spillover Effect? An Analysis from the Perspective of Invested Companies

Abstract

This paper explores the effects of the environmental, social, and corporate governance (ESG) performance of corporate venture capital (CVC) parent companies on the ESG performance of their invested companies. By analyzing a sample of listed companies in the Chinese stock market, we find that the strong ESG performance of CVC parent companies enhances the ESG performance of the invested companies. Furthermore, we demonstrate that the ESG spillover effects from CVC parent companies are more pronounced in state-owned, non-manufacturing, and large-sized CVC parent companies compared to non-state-owned, manufacturing, and small-sized parent companies. Additionally, we show that both the inter-organizational learning effect of the invested companies and the CVC governance effect serve as mechanisms through which the ESG spillover effects from CVC parent companies manifest. Finally, we illustrate that the overall ESG spillover effects primarily stem from the environmental responsibility and corporate governance of CVC parent companies, rather than their social responsibilities. Our findings have important implications for enhancing the ESG performance of enterprises through socially responsible CVC investments, thereby facilitating the economic and industrial green transformation and development.

Keywords: Corporate venture capital, ESG, parent company, invested companies