ESG performance and investment expansion: Evidence from Chinese listed firms.

• This study examines the expansive effects of ESG performance on enterprises' investment decisions. • The investment expansive effects are reconfirmed by the results of generalized difference-in-difference model. • The investment expansive utility of ESG is time-sensitive and attenuating. • This study dissects the influence channels of ESG on investment from the perspective of financing sources. Using the listed company datasets from 2010 – 2022, this paper explores how environment, society, and governance (ESG) performance affects enterprises' investment expansion. By employing a series of forefront empirical methods, our study finds that enterprises with better ESG performance have higher propensity of investment expansion. The conclusion shows robustness when considering the endogeneity problem and in robustness tests. Additionally, we explore the dynamics of ESG's effects on investment expansion and the impacts from different pillars. Finally, we discuss the mechanism from the perspective of financing sources. This study provides insights for promoting the structural transformation of China's economy. [ABSTRACT FROM AUTHOR]