ESG Rating Disagreement and Corporate Total Factor Productivity: Inference and Prediction

Abstract

This paper examines how ESG rating disagreement (Dis) affects corporate total factor productivity (TFP) in China based on data of A-share listed companies from 2015 to 2022. We find that Dis reduces TFP, especially in state-owned, non-capital-intensive, and low-pollution firms. Mechanism analysis shows that green innovation strengthens the dampening effect of Dis on TFP, and that Dis lowers corporate TFP by increasing financing constraints. Furthermore, XGBoost regression demonstrates that Dis plays a significant role in predicting TFP, with SHAP showing that the dampening effect of ESG rating disagreement on TFP is still pronounced in firms with large Dis values.

Keywords: ESG rating disagreement, Total factor productivity, Green innovation, Financing constraints, Machine learning