This research focused on the relationship among Environmental, Social and Governance (ESG) performance, ESG-related corporate governance Human Resource Management (HRM) practices and corporate financial performance (CFP) in a Chinese context. The HRM practices were specified to executive gender diversity and executive compensation. Besides, the research question was: Could Chinese ESG-related HRM practices in corporate governance influence CFP through altered ESG performance while moderated by CEO duality? To answer this question, this study used annual secondary data of Chinese-listed companies between 2016 and 2020 to conduct a quantitative analysis.
As a result, this study found that executive compensation harmed CFP. There was only a positive trend between executive gender diversity and CFP. At the same time, neither HRM practice had a statistically significant influence on ESG performance. ESG performance did not mediate the association between ESG-related corporate governance HRM practices and CFP. Instead, it possibly, by chance, performed as a positive confounder. In contrast, this research found evidence to support that ESG performance negatively impacted CFP, and CEO duality reinforced this negative correlation.
Based on these findings, this research provided some practical suggestions to organisations. For instance, companies should pay attention to HRM awareness, improve People Analytics systems, establish precise accountability and upgrade executive performance appraisal. Moreover, this research fulfilled two research gaps by choosing China as the research context and focusing on the corporate governance dimension.
Keywords: Environmental, Social and Governance (ESG); corporate financial performance; executive gender diversity; executive compensation; CEO duality
08 February 2024